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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE
ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\nI.T.A. No. 380/Mum/2023 & are cross\nappeals by the assessee and the revenue for AY 1992-93 and I.T.A. No.\n462/Mum/2023 & I.T.A. No. 1182/Mum/2023 are cross-appeals for AY\n1993-94.\n2. All these appeals were heard together and are disposed off by this\ncommon order for the sake of convenience and brevity.\n3. I.T.A. No. 380/Mum/2023 & I.T.A. No. 1181/Mum/2023; AY 1992-93.\nRepresentatives were heard at length. Case records carefully\nperused and the relevant documentary evidences duly considered in\nlight of Rule 18(6) of the ITAT Rules, 1963.\n4. The grievance of the assessee read as under:-\n\"1. The Ld. CIT(A) has erred in law and in facts in rejecting the books of accounts\nand holding that the same do not stand admitted.\n2. The Ld. CIT(A) has erred in law and in facts in confirming the addition of Rs.\n5,10,025/- on account of alleged unexplained investments of the appellant.\n3. The Ld. CIT(A) has erred in law and in facts in confirming the addition of Rs.\n40,385/- on account of alleged unexplained receipts.\n4. The Ld. CIT(A) has erred in law and in facts in making addition of Rs.77,451/-\nby enhancing the income to that extent on account of unexplained receipts in the bank\naccount. The Ld. CIT(A) has not complied with the provisions of 251 of the Act while\nmaking the said enhancement.\n5. The Ld. CIT(A) has erred in law and in facts in confirming the addition on\naccount of profit from partnership firm, M/s. Sunrise Enterprises of Rs.2,52,075/-.\n6. The Ld. CIT(A) has erred in law and in facts in allowing the deduction of\ninterest expense only to the extent of Rs.14,92,800/- as against the aggregate amount\nof Rs.2,40,00,000/- claimed by the appellant.\n7. The Ld. CIT(A) has erred in law and in facts in enhancing the assessed income\nof the appellant by Rs.20,83,911/- on account of difference in the balance in the books\nof account of Late Mr. Harshad S. Mehta for A.Y. 1992-93. The Ld. CIT(A) has not\ncomplied with the provisions of s.251 of the Act while making the said enhancement.\n8. The Ld. CIT(A) has erred in law and in facts in not appreciating that interest\nu/s.220(2) of the Act was incorrectly computed by the Ld. A.O.\n9. The appellant craves leave to add to, amend, alter or delete all or any of the\nforegoing grounds of appeal
.”\n5. Ground No. 2 relates to the addition of Rs.5,10,025/- on account of\nalleged unexplained investments of the assessee. Briefly stated the facts\nof the case are that the assessee is a notified person under the Special\nCourt (Trial of Offences relating to transactions in Securities) Act, 1992\nand all assets including bank accounts were attached and vested in the\nhands of the Custodian appointed under the said Act. The original\nassessment was completed on 28/02/1995 determining the total income\nat Rs.23,43,22,140/-. The quarrel travelled up to the Tribunal and the\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n4\nTribunal vide order dated 28/04/2006 in ITA No. 400/Mum/2004, set aside\nthe assessment to be re-framed de novo in accordance with law.\nThereafter, in compliance with the order of the Tribunal, the proceedings\nwere initiated and order was framed u/s 144 r.w.s 254 of the Act\ndetermining the total income at Rs.24,65,02,868/-. The quarrel again\nwent up to the Tribunal and the Tribunal vide order dated 07/06/2013 in\nITA No. 583/M/2012 again set aside the assessment and restored the\nissues to the file of the AO. Pursuant to the order of the Tribunal re-\nassessment proceedings were initiated.\n6. The AO found that in the original assessment order as well as the\nconsequent assessment order, the addition of Rs.21,86,46,178/- was\nmade on account of unexplained investment and trading in shares which\nwas based upon the information gathered from the Custodian appointed\nunder the Special Court Act, 1992, various companies issuing shares\ndealt in by the assessee, dividend account and investment in shares\naccounts by the assessee, shares seized from various premises of the\ngroup, client of the group and contract notes. The status of the additions\ncan be understood from the following chart:-\nSr.\nNo.\nParticulars/source\nof\naddition\nAmount\nof\naddition (Rs.)\nAdditions deleted\nby Ld. CIT(A)\n(Rs.)\nAdditions\nsustained by\nLd. CIT(A)\n(Rs.)\n1\nCustodian Letter dated\n29.10.1993\n6,27,750\n6,27,750\n-\n2\nCompany\nletters\nreceived u/s 133(6)\n63,67,586\n59,36,861\n4,30,725\n3\nDividend\ndetails/warrants\n82,42,720\n81,63,420\n79,300\nTotal\n1,52,38,056\n1,47,28,031\n5,10,025\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n7\n7. On identical set of facts in one of the group cases, namely, Sudhir\nS. Mehta, Co-ordinate Bench in ITA No. 417/Mum/2023 & ITA No.\n1179/Mum/2023 had considered the grievance in details and held as\nunder:-\n
15. Considering the facts in totality, we are of the considered view that even in the\nthird round of litigations, the AO could not provide the specific information/details\ncollected from the companies on the basis of which the impugned additions have been\nmade, are in complete violation of the principles of natural justice.\n16. We find that the Co-ordinate Bench in the case of Hitesh S. Mehta vs. DCIT\nin ITA No. 538/Mum/2012, while setting aside the issues to the file of the AO, has\nspecifically mentioned that, “Therefore, the Assessing Officer is directed to provide\ncopies of all information on which basis, the AO wanted to made additions in the hands\nof the assessee. If the AO does not provide the material then in our view addition can\nnot be made.” This specific direction has been upheld by the Hon'ble High Court of\nBombay in ITA No. 2490 of 2013, vide order dated 07/06/2016, wherein the Hon'ble\nHigh court, held as under:-\n“(d) We find that the impugned order of the Tribunal on the above issue is unimpeachable The\nbasic principles of natural justice require that before any addition is made by the Assessing\nOfficer on information obtained from third parties/own source, he must confront the assessee\nwith the material so obtained. This above would enable the assessee to explain the\ncorrectness/incorrectness or unreliability of the evidence so obtained. In the absence of the\nnecessary evidence sought to be used being given by the Assessing Officer to the Assessee, it\nwould amount to condemning a person without a proper hearing.”\n16.
1. Similar view was taken by the Co-ordinate Bench in ITA No. 5190/Mum/2017. The relevant findings read as under:-\n“So far as, the second amount of 7,28,925/- representing the addition made on the basis of\nletters filed by four companies as mentioned at serial no. 9 to 12 in para no. 9 above, we find\nthat in the said letters details provided were incomplete as it is not clear whether the same\npertain to the year under consideration. For example, the details and information provided by\nthese companies do not explain to which year these transaction relate to and there were several\nflaws in the said letters. Thus, the details provided by above 4 companies do not reflect the\nexact details to come to the conclusion the correct holding of the assessee and therefore, we find\nmerits in the arguments of the Ld. AR that the addition on the basis of said letters is not\njustified and can not be sustained. Accordingly, we set aside the order of the CIT(A) on the\nissue and direct the AO to delete the addition.\"\n16.
2. Similarly, the Co-ordinate Bench in the case of Pratima H. Mehta in ITA NO.\n416/Mum/2023 and 1180/Mum/2023, had the occasion to consider an identical\nsituation and the Co-ordinate Bench held as under:-\n“18. As regards the addition made on the basis of company letters, the learned AR\nsubmitted that the enquiries were made by the AO during the course of original\nassessment proceedings with various companies seeking information in respect of the\nshareholding of the assessee. It was further submitted that although the said\ninformation so received was used to determine the shareholding in the various scrips\n\nand treated the same as unexplained, however, copies of these evidences were never\nprovided to the assessee. In this regard, the learned AR referred to details of various\nletters requesting the AO/learned CIT(A) to provide the information received from the\ncompany on the basis of which addition was made. The learned AR further submitted\nthat to the extent company letters were provided by the AO, in the third round of\nproceedings, assessee's explanation was accepted by the AO and the addition to an\nextent of Rs.1,32,13,835, was deleted. It was further submitted that during the course\nof proceedings before the learned CIT(A), even though several letters were provided to\nthe assessee, the copies of letters based on which the addition of Rs.3,13,213, was\nsustained, were not provided to the assessee.
19. We find that the coordinate bench of\nthe Tribunal vide its order, in the second round of proceedings, in ITA\nNo.2694/Mum./2012, vide order dated 30/06/2014, specifically directed the AO to\nprovide copies of all information on the basis of which additions were made in the\nhands of the assessee. The coordinate bench further held that if the AO does not provide\nthe material then the addition cannot be made. The relevant findings of the coordinate\nbench in the aforesaid decision, are reproduced as under:-\n\"5. After considering the impugned order, various Tribunal orders in the\ngroup cases of the assessee and also the grounds raised
before us, we find that\nin the case of Smt. Rasila S. Mehta (supra) and in other cases also, similar\ngrounds were raised. In these cases, the Tribunal has set aside the entire matter\nto the file of the Assessing Officer for making fresh assessment denovo. Since\nthe facts of the assessee's case are similar to other cases viz. Hitesh S. Mehta,\nRasila S. Mehta, Jyoti H. Mehta and Pratima H. Mehta, cited above, therefore,\nfor the sake of ready reference, the relevant findings, as given in the decision of\nRasila S. Mehta, is reproduced herein below:-\n\"3.2 Having considered the rival submissions and careful perusal of the\nrelevant material on record, we note that the CIT(A) while deciding the\nmatter has relied upon the order in the case of Shri Hitesh 5 Mehta, as\nit is evident from para 9.20 as well as para 10.1 of the impugned order.\nWe further note that the facts in the case of the assessee as well as in\nthe case of Shri Hitesh S. Mehta, are identical and the matter arising\nfrom the same search and seizure action u/s 132 of the Act. The co-\nordinate bench of the Tribunal, while deciding the identical matter in\nthe case of Shri Hitesh S. Mehta, has disposed off the same in Para-4 &\n5 as under:-\n4. We have heard rival submissions and consider them\ncarefully. We have also perused the copies of the order of the\ntribunal in case of Smt. Pratima Mehta and the assessee passed\nin first round.\n5. After considering all the relevant material, we found that the\nmatter should go back to the file of the Assessing Officer to pass\na fresh order. It is seen that for rejecting the books of account,\nthe AO has not given any valid reasons as no specific defect has\n\nbeen pointed out in. the books of account, therefore in our view\nthe Assessing Officer should go through the books for\ndetermining the income on the basis of books accounts\"\nThe Assessing Officer has to bring on record specific evidence\nor defect to prove falsity of books of account as no falsity has\nbeen proved in the assessment order passed by the AO. Besides\nthis the department has to provide all the details and material\non which basis the addition have been made earlier. If such\nmaterial is disputed by the assessee then in our view correctness\nof such material has to be examined as per provision of law, we\nare not convinced with the argument of Id. DR that assessee can\ncollect information from parties from where Assessing Officer\nhas obtained the copies on which basis the addition have been\nmade, Therefore, Assessing Officer is directed to provide the\ncopies of all information on which basis, the AO wanted to made\nadditions in the hands of the assessee. If the AO does not provide\nthe material then in our view addition cannot be made, In view\nof above facts and circumstances, we set aside order of the\nauthorities below and restore the issues to the file of the\nAssessing Officer to pass assessment de novo after affording\nreasonable opportunity of being heard to the assessee and as per\nobservations of ours made in the order as above. We order\naccordingly.\n4 Since the facts and circumstances are identical and the nature of issue\nraised in the case of the assessee as well as in the case of Shri Hitesh S\nMehta (supra) are also similar; therefore, to maintain the rule of\nconsistency, we set aside the matter to the record of the Assessing\nOfficer with the similar directions and terms as in the case of Shri\nHitesh S Mehta (above).\"\n6. Thus, consistent with the view taken by the Tribunal in all these cases,\nwherein identical facts and issues are involved, therefore, we also set aside the\nimpugned order passed by the learned Commissioner (Appeals) and restore\nback the entire issue to the file of the Assessing Officer for denovo assessment\nwith similar directions. The Assessing Officer shall provide due and effective\nopportunity of hearing to the assessee. We order accordingly.\"\n20. We further find that the Revenue's appeal against the aforesaid decision\nwas dismissed by the Hon'ble jurisdictional High Court in CIT_v/s Smt.\nPratima H. Mehta, of 2015, vide order dated_26/09/2017.\nTherefore, from the above, it is evident that the addition of Rs.3,13,213, is based\non the evidence which was not furnished to the assessee. In view of the specific\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n8\ndirections of the coordinate bench of the Tribunal in assessee's own case, in the\nsecond round of proceedings, we find no basis in sustaining such an addition.\nAccordingly, the addition of Rs.3,13,213, made on the basis of company letters,\nwhich were not provided to the assessee is deleted. Further, the learned DR\ncould not bring any material on record to controvert the partial relief granted\nby the learned CIT(A), accordingly, the relief so granted is upheld. Therefore,\nthe appeal by the assessee in respect of the aforesaid addition is allowed, while\nthe appeal by the Revenue is dismissed.\"\nIn light of the above decisions of the Co-ordinate Bench, to sum-up even in the\nfirst round of litigation, the AO could not provide the details which were the basis for\nmaking the impugned additions. Therefore, in our considered view, such additions\ncannot be sustained, keeping in mind the number of decades passed since the original\nassessment order was framed. Moreover, the additions have been made in violation of\naudi alteram partem. We, therefore, direct the AO to delete the impugned addition.\n18. (II) – The second addition is based upon the letter received from the\nCustodian – Rs.3,89,77,270/-.\n***This space has been left blank intentionally, P.T.O.***\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n9\nThe letter received from the custodian, reads as under:-\nRegd.\n\nअभि\nविशेष न्यायालय (प्रतिभूति..\nप्रपराधं विचारण\nतोपची मंनिर\nAnnx\nYY\"\nOFFICE OF THE CUSTODIAN\n...THE SPECIAL COURT (Telavi offences relating to\n2\ntransactions in Securities) Act, 1992\n3rd Floor, Bank of Baroda Bhawan,\n16. Parliament Street,\nNEW DELHI-110001\nदूरभाष: 33408303241,279 Phonos: 3320836,3327279.\n12/cus/ATT/17/132.(118)\nदिनांक\nDated tlie.\n69\n3\n1019.93....\nTo\nShri C.P.Ramaswamy,\nDy. Director(Investigations)\nOffice of the Director General Investigations\nIncome Tax\nBombay.\nSir,\nAs requested by you we are enclosing the details of\nproperties held by Harshad Mehta Group intimated to us by\nvarious companies as registered in their books. In this\nconnection, I would like to state that these figures are\nsubject to constant changes due to the following:\n1)\nA part of these holdings may have been sold by the\nnotified persons in blank.which will need to be excluded\non certification in terms of Special Court's order in\nMisc.Petition 1 of 1992.\n2)\nThe value of these shares are subject to the prevailing\nmarket quotations which is bound to fluctuate.\n3)\nThe companies who have not yet indicated the holdings to-..\nthis office may send the.. the information in future.\nIt may please be appreciated that for the reasons stated\nabove, the figures can not be treated as firm and final figures.\nYours faithfully,\n(RAJIV BHARDWAJ 2.\nDeputy Secretary\nEncls: as above (Nice\nferry-one)\n19.\nA bare perusal of the aforementioned letter shows that there is not even a\nwhisper of the impugned financial year or assessment year. It has also been clearly\nmentioned that the figures cannot be treated as firm and final figures. Moreover, when\nthe office of the Custodian realised some glaring errors, it clarified the information\nalready sent, as under:-\n३.\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n10\nOffice of the Custodian\nThe Special Court (TORTS) Act, 1992\nDepartment of Financial Services,\nMinistry of Finance, Government of India,\n10th Floor, Nariman Bhawan, 227, Vinay K. Shah Marg.\nNariman Point, Mumbal 400 021.\nPhones:22022251, 22856780, 22833007 Fax: 022-22810357\nE-mail: custodian.mumbai@yahoo.com\nNo.2302/CUS/BOM/HM/IT ASSESSMENT/ (2445) November 28, 2017\nThe Deputy Commissioner of Income Tax\nCentral Circle -4(1), Central Range -4\nRoom No. 1916, 19th Floor,\nAir India Bldg, Nariman Point,\nMumbai-400021\nSir.\nSub.: Information u/s 133(6) of the IT Act, 1961 in the case of Shri.\nSudhir S. Mehta for the Assessment Year 1992-93\n\n29 NOV 2017\n12.48\nMumbal\nPOR\nWith reference to your office letter no. DCIT-CC-4(1) clarification/2017-\n18 dated 20.11.2017 received in this on 24.11.2017 calling for the Information\nu/s 133(6) of the IT Act, 1961 in the case of Shri. Sudhir
5. Mehta for the\n Assessment Year 1992-93, it is states that as per your statement, your\ndepartment had Assessed the Income of Shri. Sudhir S. Mehta, Smt. Deepika A.\nMehta and other notified parties on the basis of information given by this\noffice vide letter no. 2561/CUS/ATT/IT/92(118) dated 29.10.1993 in a flopy.\nIn this connection, it is clarified that the col. No. 6 of the statement\nmeant for owner of the shares, was shown as owner 2 and the col. No. 7\nmeant for 2nd holder of the shares, was shown as Holder of the shares. As such\nshares actually held and owned by Ms. Rina and Rasila Mehta were shown as\nthose of Shri. Sudhir Mehta, who was the second holder. In support of this\nplease find enclosed letters of the following Companies showing holding of the\neach notified parties including Smt. Deepika Mehta and Sudhir Mehta, as on\nthe date of notification. I hope this will help you in re-assessing the Income of\nShri. Sudhir Mehta, Smt. Deepika Mehta and other notified parties for the\nd:my documents\suraj\us\\2445.docx\n\n Assessment Year 1992-93, If required. In case of any clarification required you\nmay approach the concerned Company for the same.\nSr\nno\nName of the Company\nLetter No.\n1\nACC Ltd\nSHR CUS DIV 4622 dated 05.10.2000\n2\nMazda Industries & Leasing\nMILL/FIN/97-98/1795 dated 20.04.1998\n3\nCastrol India Ltd\nCIL:SD:021:44768:99 dated 14.07.1999\n4\nApollo Tyres Ltd\nCS/CL-209 dated 07.04.1999\n5\nHindalco Ltd\n9431/92 dated 11.11.1992\n6\nSwaraj Engine Ltd\nSEL/02 dated 30.12.1997\n7\nTata Share Registry Ltd\nSH/TIS/58392 dated 21.08.1992\n8\nBharat Seats Ltd\nBSL/FIN/2001/3686 dated 05.03.2001\n9\nBombay Dyeing\nManufacture Co. Ltd\nSHR/1545/200 dated 22.05.2000\n\nYours faithfully,\n(J. A. MAHALE)\nUNDER SECRETARY\n20.\nIn fact, on 28/10/1993, the company, Fuller K.C.P. Ltd., certified that the\ndividend declared @24% was dispatched to the registered shareholders. Mr. Rasilal\nShantilal Mehta, holding 11900 shares which had been added by the AO in the hands\nof the assessee. Thus, an example of wrong information and in some cases, the request\nfor allotment of shares have been returned. One such company is TISCO, whose letter\nis place at page 403 in Paper Book volume-II.\n21.\nOn identical situation and facts, the Co-ordinate Bench in the case of CIT vs.\nHitesh S. Mehta ITA No. 6026/Mum/2017 and ITA No. 5190/Mum/2017, had the\noccasion to consider a similar issue and held as under:-\n“13. The second amount of addition of Rs.24,24,385/- as stated in para 8 above represented the\naddition made on the basis of Custodian letter. We observed that Rs.24,24,385/- was made on\nthe basis of Custodian letter dated 29.10.1993. The information provided in the said letter were\nincomplete. For example the date of determination of the share holdings was not mentioned,\nconstant change of the figure of holding due to reasons like non-consideration of sale of shares\nby notified parties, and the holding provided by the Custodian not matching with the\ncompanies letters.\nTherefore, the addition made by relying on the Custodian letter can not be confirmed. The case\nof the assessee is supported by the decision of the coordinate bench in Growmore Leasing &\nInvestments Ltd. Vs. DCIT in ITA. No.2192/M/2015 A.Y.1992-93 wherein it was held that\nwhere there was no evidence of the holdings of shares and securities as alleged by the revenue,\nthe addition has to be deleted. Considering these facts and circumstances and the coordinate\nbench decision, we set aside the addition of Rs.24,24,385/ sustained by CIT(A) and direct the\nAO to delete the same.\n22. Considering the facts of the case in totality in light of the letter of the custodian\nmentioned elsewhere and finding that no specific details of holding of shares for the\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n12\nimpugned assessment year has been mentioned or provided to the assessee, the\nadditions cannot be sustained. The AO is directed to delete the same.\n23. (III) – Additions made on account of dividend details/warrants\nRs.51,67,438/- \nThe details of alleged unexplained investment addition on the basis of dividend\ninformation is as under:-\nSUDHIR S. MEHTA\nΑ.Υ. 1992-93\nDetails of Unexplained Investment addition on the basis of Dividend information\nS.No.\nScrip Name\nHolding as\nper A.O.\nCredit\nGiven by\nΑ.Ο.\noriginal\norder\nIn\n(Qty)\nBalance\nQuantity in\ndispute\nFurther credit\ngiven\npursuant to\norder of the\nCIT(A)\nBalance\nQuantity\nValue (Rs.)\n1\nDCM SHRIRAM\n2,500\n2,500\n2,500\n6,31,875\n2\nEICHER TRACTORS\n4,300\n4,700\n4,700\n11,73,825\n3\nGOLDEN PROTIENS\n15,300\n100\n15,200\n15,200\n45,600\n4\nGRASIM\n5,000\n19\n4,981\n4,981\n20,54,663\n5\nKERALA CHEM\n450\n450\n450\n2,35,125\n6\nMUNJAL SHOWA\n600\n600\n600\n76,350\n7\nTATA METALS & STRIPS\n1,000\n1,000\n100\n900\n3,54,375\n8\nUNITECH\n100\n100\n100\n5,750\n9\nVAM ORGANIC\n4,150\n2,500\n1,650\n1,650\n5,89,875\nTotal\nTotal\n51,67,438\n24.\nThe details of shareholding of the assessee are exhibited from pages 414 to 418\nof the Paper Book volume – II. The investment in shares DCM Ltd. of 2500 shares are\ncoming from earlier years as the same is opening balance. Similarly, 3900 shares of\nEicher Motors which were opening balance of the assessee were only 200 shares with\nbonus of 400 shares at the end of the impugned financial year. The holding of Golden\nProteins at 15,300 shares have been wrongly taken from the opening balance of\nGujarat Ambuja Proteins. The complete details of short-term capital gains and long-\nterm capital gains on sale of shares during the impugned financial year have been\ngiven at pages 247 to 249 of the paper book with complete details of dividends received\nfrom shares during the financial year at pages 258 to 263 the paper book. It would be\npertinent to mention here that the entire additions have been based on dividends\ndeclared by the companies of which the assessee may or may not have held the shares\nduring the year under consideration as the same is not based on physical holding of\nshares and merely on the basis of information collected behind the back of the assessee\nfor which we have already expressed our view elsewhere. Therefore, this addition also\ncannot be sustained. Accordingly, Ground No. 2 with all its sub- grounds is allowed.\n\nRASILA S MEHTA\nΑ.Υ. 1992-93\nAnnexure -C Unexplained Receipts\nAccount in which it is explained & reflected\nDate\nAmount Received\n13\n8. On finding parity of facts, respectfully following the decision of the\nCo-ordinate Bench, we direct the AO to delete the impugned addition.\nGround No. 2 is allowed.\n9. Ground No. 3 relates to the addition of Rs.40,385/- on account of\nalleged unexplained receipts.\n10. We find that originally, the AO made addition of Rs.7,60,100/- on\nthe basis of details of bank accounts of the assessee provided by Reserve\nBank of India. The details are as under:-\n22-05-1991\n3,000.00\n15.00\nInterest on Saving Bank A/c. No 2001\n08-08-1991\n10,446.69\nDividend income A/c. No 2002\n28-08-1991\n4,957.00\n31-08-1991\n22.56\nInterest on Saving Bank A/c. No 2001\n09-09-1991\n4,591.77\n30-09-1991\n16,400.00\nInterest on Bank Loan A/c. No 1009\n01-10-1991\n4,682.44\nDebenture Interest A/c. No 2003\n31-10-1991\n1,367.19\nDebenture Interest A/c. No 2003\n31-10-1991\n2.06\nDebenture Interest A/c. No 2003\n31-10-1991\n10.28\nDebenture Interest A/c. No 2003\n31-10-1991\n3,201.00\nDividend income A/c. No 2002\n31-10-1991\n887.50\nDividend income A/c. No 2002\n31-10-1991\n2,400.00\nDividend income A/c. No 2002\n31-10-1991\n34,967.00\nDividend income A/c. No 2002\n31-10-1991\n76,917.00\nDividend income A/c. No 2002\n31-10-1991\n1,772.67\nInterest on Saving Bank A/c. No 2001\n04-01-1991\n60,868.00\nDividend income A/c. No 2002\n04-01-1991\n97.50\nInvesment in share / Deb\n04-01-1991\n180.00\nDebenture Interest A/c. No 2003\n07-02-1992\n15.00\nInterest on Saving Bank A/c. No 2001\n10-02-1992\n600.00\n15-02-1992\n350.00\n15-02-1992\n2,460.00\n15-02-1992\n1,364.00\n15-02-1992\n2,542.00\n15-02-1992\n1,766.00\n15-02-1992\n350.00\n15-02-1992\n350.00\n15-02-1992\n4,100.00\n20-02-1992\n5,080.90\nInterest on Saving Bank A/c. No 3001\n06-03-1992\n22.89\nInterest on Saving Bank A/c. No 2001\n20-03-1992\n150.00\n20-03-1992\n14,123.00\n24-03-1992\n5,00,000.00\nM/s. Harshad S Mehta A/c No 4011\n31-03-1992\n41.11\n7,60,100.56\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n14\n11. The AO repeated the additions. Before the ld. CIT(A), it was\nstrongly contended that the alleged unexplained receipts are interest,\ndividend or investment related transactions which are already accounted\nfor in the books. The ld. CIT(A) was convinced with the explanation of\nthe assessee and deleted the addition except the addition to the tune of\nRs.40,385/- which was confirmed. The following chart will explain the\nalleged unexplained receipts confirmed by the ld. CIT(A).\nASWHIN S. MEHTA (L/H OF LATE RASILA S. MEHTA)\nA.Y.1992-93\nChart showing details of unexplained receipts in various banks as per\nLd. A.O.\nDate\nAmount\nreceived\n(Rs.)\nBank\ndetails\nParticulars\n22.05.1991\n3,000\nSBMDA-L\nBank charges reversed\n31.08.1991\n4,597\nSBMDA-L\nSB Interest\n30.09.1991\n4,592\nBOABOM\nSB Interest\n15.02.1992\n600\nANZADY\nNo such entry found\n15.02.1992\n350\nANZADY\nNo such entry found\n15.02.1992\n2,460\nANZADY\nNo such entry found\n15.02.1992\n1,364\nANZADY\nNo such entry found\n15.02.1992\n2,542\nANZADY\nNo such entry found\n15.02.1992\n1,766\nANZADY\nNo such entry found\n15.02.1992\n350\nANZADY\nNo such entry found\n15.02.1992\n350\nANZADY\nNo such entry found\n15.02.1992\n4,100\nANZADY\nNo such entry found\n20.03.1992\n150\nANZADY\nNo such entry found\n20.03.1992\n14,123\nANZADY\nNo such entry found\n31.03.1992\n41\nAMXDNR\nSB Interest\nTOTAL\n40,385\n12. Insofar as, savings bank interest and reversal of bank charges are\nconcerned, the same has been included in the profit of the assessee.\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n15\nTherefore, to that extent, we do not find any reason to sustain the\naddition. In respect of the other addition related to the entries in ANZ\nBank, we find that the assessee has categorically stated that these entries\ndo not pertain to her and, therefore, cannot submit any details. The lower\nauthorities expected the assessee to prove the negative. Once the assessee\nhas categorically stated that the entries do not pertain to her, then, it was\nfor the Officer to bring evidence on record to show that the entries pertain\nto the assessee. Since no such evidence has been brought on record, we\ndo not find any merit in the impugned additions. The AO is directed to\ndelete the same. Ground No. 3 is allowed.\n13. Ground No. 4 is not pressed before us, therefore, the same is\ndismissed as not pressed.\n14. Ground No. 5 relates to the addition on account of profit from\npartnership firm M/s. Sunrise Enterprise amounting to Rs.2,52,075/-.\n15. We find that the assessee has mis-interpreted the relevant\nprovisions of law as the share of profit from a partnership firm is not\ntaxable in the hands of the partner but this amendment has come from\n01/04/1993 relevant to AY 1993-94 and the impugned AY is 1992-93.\nTherefore, the action of the AO cannot be faulted with. Ground No. 5 is\naccordingly dismissed.\n16. Ground No. 6 relates to the restriction of the addition on account\nof interest expenses to the extent of Rs.14,92,800/- as against the\naggregate amount of Rs.2,40,00,000/- claimed by the assessee.\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n16\n17. The AO disallowed the claim of deduction of interest payable to\nbroking firms of the family members on the following reasons:-\n(i) The liabilities were not crystallized during the year.\n(ii)Interest payable is tentative and professional.\n(iii) There is no basis as per which the assessee has right to pay\nand the creditor has the right to receive.\n(iv) There is no basis of computation of interest payable which\nhas been provided by the assessee.\n(v) The provisions made on account of interest payable is a\ncontingent liability and, therefore, cannot be allowed as a business\nexpenditure.\n(vi) It is also seen that these broking firms have not charged any\ninterest on the amounts receivable from the companies of this\ngroup where the books of accounts have been produced before the\nAssessing Officer.\n17.
1. Similar disallowance was made in the case of Sudhir S. Mehta,\nwhich has been considered by the Co-ordinate Bench in ITA No.\n417/Mum/2023 & in its order dated 06/02/2025.\nThe relevant findings read as under:-\n“27.\nGround No. 4, relates to the claim of interest expenditure Rs.2.04 Crores out\nof which the ld. CIT(A) allowed only Rs.12,93,360/-.\n27.
1. Similar issue came up for consideration before the Coordinate Bench in the case\nof Pratima H. Mehta (supra). The relevant findings read as under:-\n“27. Since the issue arising in ground no.3, raised in assessee's appeal, and grounds no.2 and\n3, raised in Revenue's appeal, pertains to the deduction of interest expenditure, therefore the\naforesaid grounds are dealt with together.\n28. The brief facts of the case pertaining to this issue, as emanating from the record, are: During\nthe assessment proceedings, the assessee submitted that the transactions in the capital market\nhave been made through three broking firms belonging to the family members of the assessee.\nAs per the details submitted by the assessee, it was submitted that the amount of interest of\n\nRs.2,46,33,261 are shown as payable to family run broking firms such as M/s HSM, M/s\nASM and M/s JHM. The AO vide order passed under section 144 read with section 254 of the\nAct did not agree with the submissions of the assessee and disallowed the deduction of interest\nclaimed for the following reasons:-\n(i) The liabilities were not crystallise during the year.\n(ii) The interest payable is tentative and provisional.\n(iii) There is no basis as per which the assessee has a right to pay and the creditors has are right\nto receive.\n(iv) There is no basis of computation of interest payable which has been provided by the\nassessee.\n(v) The provisions made on account of interest payable is a contingent liability and therefore,\ncannot be allowed as a business expenditure.\n(vi) It is also seen that these broking firms have not charged any interest on the amount\nreceivable from the companies of this group with the books of accounts have been produced\nbefore the Assessing Officer.\n29. The AO following the approach adopted in earlier round of litigation rejected the assessee's\nclaim of deduction on account of interest and disallowed interest payment of Rs.2,46,33,261.\nThe learned CIT(A), vide impugned order, partly allowed the ground raised
by the assessee on\nthis issue and held that the main purpose of incurring the interest expenditure was not earning\nincome from dividends and unless the interest expenditure was incurred solely for the purposes\nof making or earning dividend income, no deduction is possible under section 57 of the Act.\nThe learned CIT(A) further held that in the acquisition of shares for capital gains, the dividend\nincome is incidental and not a major factor, and it is thus clear that the sole purpose of\nborrowing by the assessee @12% per annum cannot be for the purpose of earning dividend\nincome. Accordingly, the interest expenditure was held to be not allowable against dividend\nincome. The learned CIT(A), however, allowed the interest expenditure only to the tune of Rs.\n15,73,548 which is the share trading profit. Being aggrieved, both assessee and Revenue are in\nappeal before us.\n30. We have considered the submissions of both sides and perused the material available on\nrecord. From the perusal of the computation of total income, forming part of the paper book on\npages 464-466, we find that the assessee claimed interest on bank loans of Rs.2,46,33,261\nagainst the income under the head \"income from other sources\". It is evident from the record\nthat the learned CIT(A) placed reliance upon the decision of the Hon'ble jurisdictional High\nCourt in CIT v/s Jagmohandas J. Kapadia, [1966]
61. ITR 663 (Bom.), in order to support the\nconclusion that unless the interest expenditure was incurred solely for the purposes of making\nor earning dividend income, no deduction as possible under section 57 of the Act. The relevant\nfindings of the Hon'ble jurisdictional High Court in the aforesaid decision, as relied upon in\nthe impugned order, are as under:-\n\"It would be noticed that what is allowable as expenditure under the said sub- section\nis only the expenditure incurred solely for the purpose of making or earning dividend\nincome. Emphasis thus appears to be on the object or purpose of incurring of the\nexpenditure. The exclusive object of incurring the expenditure has to be the making\nor earning of the dividend income. The mere fact that income by way of dividend has\naccrued and that the expenditure incurred is in some manner or other related to the\naccrual of the dividend income is not sufficient.\"\n31. We find that the Hon'ble Supreme Court in Seth R. Dalmia v/s CIT, [1977] 110 ITR 644\n(SC) agreed with the view taken by the Hon'ble jurisdictional High Court in CIT v/s Η.Η.\nMaharani Vijaykuverba Saheb of Morvi [1975] 100 ITR
67. (Bom), wherein it was held that\nthe connection between the expenditure and the earning of income need not be direct, and even\nan indirect connection could prove the nexus between the expenditure incurred and the\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n18\nincome. We further find that in CIT v/s Smt. Sushila Devi Khadaria, [2009] 319 ITR 413\n(Bom.), in a similar factual matrix, i.e. wherein the AO denied the deduction claimed under\nsection 57(iii) of the Act on the basis that the expenditure was not incurred wholly for the\npurpose of earning income as the taxpayer was engaged in selling shares in the stock market\nand the dividend income had accrued as a by-product, the Hon'ble jurisdictional High Court\nby placing reliance upon the aforesaid decision of the Hon'ble Supreme Court in Seth R.\nDalmia (supra), upheld the allowance of finance expenditure as deduction under section 57(iii)\nof the Act against the income by way of dividends, finance charges and interest which were\nshown as income from other sources by the taxpayer. Therefore, respectfully following the\naforesaid decision of the Hon'ble Supreme Court in Seth R. Dalmia (supra), we are of the\nconsidered view that the assessee is entitled to claim a deduction of interest expenditure under\nsection 57 of the Act since receipt of dividend is merely due to the shareholding of the assessee\nand the interest expenditure has nexus with the income under the head \"income from other\nsources\" including dividend income even though not direct. Accordingly, the AO is directed\nto allow the interest expenditure claimed by the assessee under section 57 of the Act. As a\nresult, ground No. 3 raised in assessee's appeal is allowed, while ground No. 2 and 3 raised in\nRevenue's appeal is dismissed.”\n27.
2. Similarly in the case of Jyoti H. Mehta vs. ACIT in ITA No. 1186/Mum/2023, the Tribunal has considered similar grievance, which\nreads as under:-\n“41. Ground no 6 pertains to sustaining the addition on account of interest disallowed. The\nLd. CIT (A) has granted partial relief, by allowing on proportionate basis, the interest\nexpenditure only to the extent of Rs.11, 49,540/- as against the total claim of Rs.1, 02,\n00,000/- made by the assessee.”\n27.
1. And the Co-ordinate Bench following the order of the case of Pratima H. Mehta\n(supra), held as under:-\n\"44. It is apparent that the reasons given for not allowing the interest expenditure claimed\nby the assessee u/s 57 of the Act are not tenable in view of the decision of the Apex Court in\nthe case of Seth R. Dalmia (supra) which is duly followed by the co-ordinate bench of the\nTribunal in the case of Smt. Pratima Mehta (supra). Respectfully following these judicial\nprecedents, we allow this ground of appeal in favour of the assessee and direct the A.O. to allow\ninterest expenditure claimed by the assessee while computing the taxable income. In the result,\nground no. 6 raised by the assessee is allowed.”\n28. In assessee's own case for AY 1991-92, the Coordinate Bench in ITA No.\n5966/Mum/2017 and 635/Mum/2018, has allowed the claim of interest. On finding\nparity of facts, respectfully following the decision of the Coordinate Bench (supra), we\ndirect the AO to allow the entire claim of interest. Accordingly, Ground No. 4 is\nallowed.\"\n18. Finding parity of facts and circumstances, respectfully following\nthe decision of the Co-ordinate Bench, we direct the AO to allow the\nentire claim of interest. Ground No. 6 is allowed.\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n19\n19. Ground No. 7 relates to the enhancement of the assessed income\nof the assessee by Rs.20,83,911/- on account of difference in the balance\nin the books of account of Late Shri Harshad S. Mehta.\n20.\nReconciliation of balances as on 31/03/1992 in the books of the\nassessee and in the books of Late Shri Harshad S. Mehta can be\nunderstood from the following chart:-\nΑ.Υ. 1992-93\nChart showing Reconciliation of Balances as on 31.03.1992 in the Books of Late Rasila S. Mehta and in the books of Late\nIn the Books of Mrs. Rasila S. Mehta\nSr.No.\nA/c No.\nA/c Name\nBalances Payable /\n(-) Receivable\nShri Harshad S. Mehta\nIn the Books of Mr. & M/s. Harshad S. Mehta\nSr.No.\nA/c No.\nA/c Name\nBalances Payable /\n(-) Receivable\n1\n4011\nM/s. Harshad S. Mehta\n12,39,62,826\n1\n3001 (13072)\nRasila S.Mehta\n-12,18,78,915\n2\n1011\nMr. Harshad S. Mehta\n26,35,000\n2\n2037\nRasila S.Mehta - Loan A/c\n-26,35,000\nΑ....\n-12,45,13,915\nMr. Harshad S. Mehta\n3\n1006\nRasila S. Mehta\n-20,00,000\n4\n2010\nLoan A/c (RSM)\n15,00,000\nB....\n-5,00,000\nPayable to Harshad S. Mehta\n12,65,97,826\nReceivable from Rasila S. Mehta (A+B)...\n-12,50,13,915\nClosing Balance Difference Amount as per Books of A/cs submitted by the Notified Entities\n15.83.911\n21. The balance difference mentioned hereinabove amounting to Rs.\n15,83,911/- is reconciled from the following chart:-\nASHWIN S. MEHTA (L/H OF LATE RASILA S. MЕНТА)\nΑ.Υ. 1992-93\nChart showing Reconciliation of difference in the balances in the books of Late Shri Harshad S.\nMehta and Late Smt. Rasila S. Mehta\nSr No. Particulars\nDifference in opening Balances (Chart A)\nDifference on account of one mismatch in transaction & excess brokerage\ncharged by M/s.Harshad S. Mehta (Chart B)\nRs.\n6,08,640\n9,77,652\nMiscellaneous Difference on account of Postage @20/- excess charged by\nM/s.Harshad S. Mehta (Chart C)\n-2,381\nTotal...\n15,83,911\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n20\n22. We find that certain entries which have been passed by the assessee\nin her books of accounts have not been passed in the books of Late Shri\nHarshad S. Mehta, which can be understood from the following chart:-\nASHWIN S. MEHTA (L/H OF LATE RASILA S. MEHTA)\nΑ.Υ.1992-93\n(A): Chart showing Reconciliation of Entries Forming part of Opening Balances of Books of Accounts of Late Rasila S. Mehta and Late Shri Harshad S. Mehta for Alleged\nDifference of Rs.6,08,640/-\nRasila S. Mehta\nHarshad S. Mehta\nSr.\nNo.\nDate\nAmounts\nDr/Cr\nIn the\nBooks of\nAccount\nNo.\nA/c Name\nDate\nAmounts\nDr/Cr\nIn the Books\nof\n(Business/\nPersonal)\nAccount\nNo.\nA/c Name\nDifference\nAmount\nRemarks\n1\nOp bal\n10,18,76,110\nCr\nRSM\n4011\nM/S. HSM\nOp bal\n-10,44,59,470\nDr\nM/S. HSM\n13072\nMEHTA RASILA S\n-25,83,360\n2\n10,18,76,110\n04.04.91\n31,92,000\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n31,92,000\nSale of 20000 Tata Steel\ndf.20.03.91 by Mrs.RSM\n-10,12,67,470\n22.
On 24/03/1992, the assessee credited Rs.11,14,344/- being on\naccount of purchase of 30000 Nagarjuna Fertilizers, which entry has not\nbeen passed by Late Shri Harshad S. Mehta in his books of account\nresulting into the alleged difference of Rs.9,77,652/- which can be\nunderstood from the following chart:-\n***This space has been left blank intentionally, P.T.O.***\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n21\nASHWIN S. MEHTA (L/H OF LATE RASILA S. MEHTA)\nΑ.Υ.1992-93\n(B): Chart showing Entries with Minor Discrepancies in the Books of Accounts of Late Rasila S. Mehta and Late Shri Harshad S. Mehta for Alleged Difference of Rs.9,77,652/-\nRasila S. Mehta\nHarshad S. Mehta\nSr.\nNo.\nDate\nAmounts\nDr/Cr\nIn the\nBooks of\nAccount\nNo.\nA/c Name\nDate\nAmounts\nDr/Cr\nIn the Books\nof\n(Business/\nPersonal)\nAccount\nNo.\nA/c Name\nDifference\nAmount\nRemarks\n1\n01.08.91\n-52,66,800\nDr\nRSM\n4011\nM/S. HSM\n01.08.91\n52,61,520\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-5,280\n0.10% Brok. Diff shown\nmore by M/s.HSM\n2\n05.08.91\n-50,93,484\nDr\nRSM\n4011\nM/S. HSM\n05.08.91\n50,88,378\nCr\nM/S. HSM\n13072\nMEHTA RASILAS\n-5,280\n0.10% Brok. Diff shown\nmore by M/s.HSM\n3\n05.09.91\n59,72,400\nCr\nRSM\n4011\nM/S. HSM\n06.09.91\n-59,78,325\nDr\nM/S. HSM\n13072\nMEHTA RASILA S\n-5,925\n0.10% Brok.Diff shown\nmore by M/s.HSM\n4\n25.09.91\n-1,35,66,000\nDr\nRSM\n4011\nM/S. HSM\n03.10.91\n1,35,52,400\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-13,600\n0.10% Brok. Diff shown\n- more by M/s.HSM\n5\n08.10.91\n-25,73,550\nDr\nRSM\n4011\nM/S. HSM\n08.10.91\n25,70,970\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-2,580\n0.10% Brok. Diff shown\nmore by M/s.HSM\n6\n29.11.91\n-26,25,420\nDr\nRSM\n4011\nM/S. HSM\n29.11.91\n26,22,788\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-2,632\n0.10% Brok. Diff shown\nmore by M/s.HSM\n7\n18.12.91\n-5,86,09,359\nDr\nRSM\n4011\nM/S. HSM\n02.01.92\n5,85,50,603\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-58,756\n0.10% Brok. Diff shown\nmore by M/s.HSM\n8\n19.02.92\n-60,02,955\nDr\nRSM\n4011\nM/S. HSM\n19.02.92\n59,96,937\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-6,018\n0.10% Brok. Diff shown\nmore by M/s.HSM\n9\n24.03.92\n11,14,344\nCr\nRSM\n4011\nM/S. HSM\nPurchase of 30000\nNagarjuna Fert. By\nMrs.RSM Thru\nM/s.HSM\n-32,500\n10\n24.03.92\n-42,84,761\nDr\nRSM\n4011\nM/S. HSM\n27.03.92\n42,80,466\nCr\nM/S. HSM\n13072\nMEHTA RASILA S\n-4,295\n0.10% Brok. Diff shown\nmore by M/s.HSM\n11\n31.03.92\n3,27,60,000\nCr\nRSM\n4011\nM/S. HSM\n31.03.92\n-3,27,92,500\nDr\nM/S. HSM\n13072\nMEHTA RASILA S\n-5,81,75,585\n5,91,53,237\n9,77,652\n22.
2. Which is further evident from the ledger account of M/s. Harshad\nS. Mehta, from the following chart:-\n/24 Mar 92 JORN\n607\n/24 Mar 92 JORN\n608\n/24 Mar 92 JORN\n609\n/24 Mar 92 JORN\n610\n/24 Mar 92 RECP\n220 1\nBANK AM\n/ 31 Mar 92 JORN\n636\n/ 31 Mar 92 JORN\n642\n/ 31 Mar 92 JORN\n644\nPage Totals\nRunning totals\n1114344.00\nBEING PURCHASE OF 30000 NAGARJUNA @ 36.8\n5 THRO' M/S HSM (REVALIDATION ENTRY)\n552309.00\nBeing Pur. of 3500 SPIC @ 156.55 in V.C\n03 thru.M/s HSM Add 0.25% Brok.\n25402.00\nBeing Pur. of 800 STANDARD MOT OR @ 31.5\n0 in V.C03 thru.M/s H SM Add 0.25% Brok.\n4284761.00\nBeing Sale of 12100 RELIANCE I ND. @ 355\n.00 in V.A01 thru. M/s HSM Less 0.25% Bro\n500000.00\nTRF BANK AM HSM\n32760000.00\n34128.44\nBeing Pur. of 20000 REVATHI C P LTD @\n162.50 in V.C08 thru.M/s HSM Add 0.25% B\n3600.00\nBEING REVALIDATION ENTRY FOR POSTAGE RS.\n20/- FOR PURCHASES THRU.M/S.HSM\n5611436.00\n37558320.44\n191997980.00\n315960805.69 G\n12,39,62,825.69 CR\n22.3.\nFrom the aforementioned reconciliation chart, it is evident that the\nentries passed by the assessee in her books of accounts have not been\npassed in the books of Shri Harshad S. Mehta and M/s. Harshad S. Mehta\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n22\nwhich has resulted into the impugned difference. Since the entries are\nreconciled, we do not find any merit in the impugned addition. The AO\nis directed to delete the same.\n24. Ground No. 8 relates to the levy of interest u/s 220(2) of the Act.\nThe ld. CIT(A) has dismissed this grievance of the assessee stating that\nthis levy of interest is not appealable before the ld. CIT(A). The ld. CIT(A)\nhas based his decision on the judgment of the Hon'ble Bombay High\nCourt in the case of CIT vs. M/s. Chika Overseas Pvt. Ltd. in of\n2010. We find that in that case, the Hon'ble High Court was seized with\nonly the levy of interest u/s 220(2) of the Act before the ld. CIT(A)\nwhereas in the case in hand, there are several grounds/issues taken,\ntherefore, the levy of interest u/s 220(2) of the Act, can be challenged\nbefore the ld. CIT(A). The Co-ordinate Bench in the case of DCIT vs. Shri\nHarsad S. Mehta in ITA No. 6227/Mит/2018, has considered this issue and\nheld as under:-\n“6.1 The Co-ordinate Bench also considered the ground raised by the Revenue with\nregard to charging of interest under section 220(2) of the Act and concluded as under:-\n“30.
Now, coming to the various grounds taken by the Revenue being\nground no. 9 to 12 regarding the levy of interest u/s 220(2) of the Act. We have\nheard the rival submissions and carefully considered the same. We noted that\nthis Tribunal vide its order dt. 20.01.2017 in the case of M/s Orion Travels\nPvt. Ltd. vs ACIT (ITA 939/MUM/2009) in which the Tribunal directed the\nAO to charge interest u/s 220(2) under Income Tax Act after 30 days of serving\nof demand notice from the fresh assessment order. We, therefore, noted that in\nthe case of CIT vs. Chika Overseas Pvt.\nLtd [2012] 247 CTR 134 (Bombay), has taken the similar view. The decision\nHon'ble Delhi High court in the case of Girnar Investment Ltd. vs. CIT [2012]\n340 ITR 529 (Delhi) dt. 5.01.2012 as relied by the Ld. DR and not of Bombay\nHigh Court. The Jurisdictional High Court decision is binding on us. We noted\nthe CIT(A) while holding that the interest u/s 220(2) is to be levied only from\nthe due date of issuance of fresh notice of demand, considered these binding\ncase laws as well as CBDT circular no 334 (F по 400/3/81-ITCC) dated 3-4-\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n23\n1982 issued by CBDT, which we perused and in our view the case of the\nassessee falls within paragraph 2 (i) of the said circular. In view of this legal\nposition, we do not find any illegality or infirmity in the order of the CIT(A)\ndirecting the AO to charge interest u/s 220(2) from the date of default of the\nfresh demand notice issued after the fresh assessment made in consequence of\nthe order of the appellate authorities. Thus, the ground no 8 to 12 of the\nRevenue stands dismissed, while ground no 32 to 35 of the assessee are allowed\nto the extent stated above.\"\nThus in view of the above findings of the Tribunal, the ground raised by the Revenue\nin the present appeal does not require any further adjudication. The issues have already\nbeen considered and decided by the Co-ordinate Bench in an appeal arising from the\nassessment order passed under section 254 r.w.s.143(3) of the Act.\n7. The ld. Authorized Representative of the assessee has also brought to our notice that\nthe Revenue in the case of assessee's brother Shri Ashwin S. Mehta in ITA\nNo.3118/Mum/2018(supra) had raised identical grounds of appeal. The Tribunal,\nafter considering the decision rendered in the case of and\n6028/Muт/2018 (supra) has dismissed the appeal of the Revenue.
8. Thus, in view of\nthe facts of the case and decision of the Co-ordinate Bench in assessee's own case, we\ndo not find any merit in the grounds raised by the Revenue. The impugned order is\nupheld and the appeal of Revenue is dismissed sans merit.”\n25. Respectfully following the decision of the Co-ordinate Bench, we\ndirect the AO to re-compute the interest u/s 220(2) of the Act.\nAccordingly, Ground No. 8 is allowed.\n26. The additional ground relates to levy of interest u/s 234A, 234B &\n234C of the Act. In our considered view, such levies are mandatory but\nonly up to the date of original assessment order. The AO is directed to\ncharge interest u/s 234A, 234B & 234C of the Act up to the date of original\nassessment order. Additional Ground is accordingly allowed.\n27.\nAccordingly, appeal of the assessee for AY 1992-93 is partly\nallowed.\n28. Coming to the revenue's appeal, the first grievance relates to the\ndeletion of addition of Rs.1,47,52,396/- made on account of unexplained\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\n \nI.T.A. No. 1182/Mum/2023\n24\ninvestment and trading in shares. This issue has been discussed in detail\nby us in the appeal of the assessee vide Ground No. 2 in ITA No.\n380/Mum/2023. For our detailed discussion therein, this Ground is\ndismissed.\n29. Ground No. 2 relates to the claim of interest expenditure. This issue\nhas been considered and decided by us in details in assessee's appeal in\nITA No. 380/Mum/2023 vide Ground No.
For our detailed discussion\ntherein, this Ground is dismissed.\n30. Accordingly appeal of the revenue for AY 1992-93 is dismissed.\n AY 1993-94\n31. The grievance of the assessee reads as under:-\n\"1.\nThe Ld. CIT(A) has erred in law and in facts in confirming the addition to the\ntune of Rs.1,20,79,176/- on account of alleged unexplained income from sale of shares.\n2.\nThe Ld. CIT(A) has erred in law and in facts in confirming the addition to the\ntune of NP Rs.43,68,116/- on account of dividend and interest income earned by the\nappellant.\n3.\nThe Ld. CIT(A) has erred in law and in facts in not granting deduction on\naccount of interest expense payable by the appellant.\n4.\nThe Ld. CIT(A) has erred in law and in facts in not appreciating that the\ninterest u/s.234A and 234B of the Act was not computed in accordance with law.\n5. The appellant craves leave to add to, amend, alter or delete all or any of the\nforegoing grounds of appeal
.”\n32. The underlying facts in the impugned addition of Rs.1,20,79,176/-\nshow that the closing stock position of the assessee in various shares as\non 31/03/1992 is taken as opening stock of the assessee for the year\nunder consideration. Though the assessee had raised objection that the\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n25\nfigures arrived at for AY 1992-93 are incorrect and should not be relied\nupon, the AO did not accept this objection of the assessee and proceeded\nby adopting figures of AY 1992-93. The AO went on to estimate the\nunexplained purchases as per Annexure 1 of his order and estimated the\nsame at Rs.12,03,08,087/-. The AO further estimated the unaccounted\nsales and profits as per Annexure 2 of his order and arrived at sale\nreceipts at Rs.18,31,86,511/- and profit at Rs.6,58,70,885/- and\naccordingly taxed the profit on sale of shares as unexplained income.\n33. On a careful consideration of the assessment order, we find that the\nAO has not given any evidence for his presumed sale. On identical set of\nfacts and circumstances, the Co-ordinate Bench in the case of Pratima H.\nMehta vs. ACIT in ITA No. 3443 and 4288/Mum/2012 dated 05/09/2014 for\nAY 1993-94, has considered a similar issue and held as under:-\n
19. The first grievance of the Revenue is that the ld. CIT(A) erred in deleting the\naddition of Rs.3,31,20,180/- made on account of profit on sale of shares.\n20. The ld. CIT(A) has considered this issue at para 6(C) of his order. During the\ncourse of assessment proceedings, on the basis of several information obtained from\nRBI, Custodian, BSE companies and third parties about the share holding of the\nassessee, the data were analysed and the holding in share of the assessee was\ndetermined as on 31-3-1992. The same was taken as opening stock for the year under\nconsideration. The closing stock of the assessee was determined for the year under\nconsideration and on comparing the opening stock and closing stock, whenever there\nwas a difference where opening stock was higher than the closing stock, it was treated\nas sale and wherever the closing stock was higher than the opening stock, the difference\nwas treated as unexplained purchase. The purchases were determined at Rs.\n8,85,75,861/- and the sales were determined at Rs.15,55,67,482/-. The profit on sale\nof shares was determined at Rs.3,31,20,180/-. The A.O. added this amount. Before the\nId. CIT(A), it was contended that the information relied upon by the A.O. were either\ngiven to the assessee during the proceedings of A.Y. 1992-93 or during the proceedings\nfor A.Y. 1993-94. It was further contended that the A.O. has computed the holding of\nshares from the information collected from difference sources. It was further submitted\nthat the working of opening stock is borrowed from the working given in A.Y. 1992-\n93 without any break-up and without any basis. After considering the facts and the\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n26\nsubmissions, the ld. CIT(A) at para 9.7 of his order observed that the A.O. did not\ngave any breakup and the basis as to how the figures of sales and purchases were\nderived by him which fact was also admitted by the A.O. in the remand proceedings.\nAt para 9.8, the Id. CIT(A) held \"I find that during the course of present proceedings\nalso, the things have not improved. The A.O. has still not been able to provide any\nbreak up or the details and information as to how the figure of profit on sale of shares\nhave been derived by him in the assessment order. Thus, I find that the very basis\ndetails germane to the addition made by the A.O. are not available on record\".\nThereafter the Id. CIT(A) followed the findings given in the case of Shri Hitesh Mehta\nfor A.Y. 1993-94 and deleted the addition. Aggrieved by this, the Revenue is in appeal\nbefore us.\n21. The Id. D.R. strongly supported the findings of the A.O. Per contra, the Id.\nCounsel for the assessee reiterated what has been submitted before the lower\nauthorities.\n22. We have carefully perused the orders of the authorities below. We have also gone\nthrough the order of the first appellate authority in the case of Shri Hitesh Mehta dtd,\n29-03-2012. We find that the entire addition has been made by the A.O. on the basis\nof information gathered from different sources. We find that the A.O. has merely\npicked up figure from the Annexure and arrived at the figure of addition without\nmaking enquiry or bringing any evidence on record. We find that on identical facts in\nthe case of Shri Hitesh Mehta, the additions were deleted. The said order was\nchallenged before the Tribunal in ITA No. 5138/Mum/2003 but this issue was not\nraised before the Tribunal. The facts and circumstances are being similar, we do not\nfind any reason to interfere with the findings of the ld. CITA). Ground No. is\naccordingly dismissed.”\n34. The revenue preferred appeal against the said order before the\nHon'ble High Court of Bombay and the Hon'ble Jurisdictional High\nCourt in ITA No. 521 of 2015, affirmed the order of the Tribunal observing\nas under:-\n10. We see no reason to allow such a course for the Tribunal found that the order\nof the First Appellate Authority in the case of Hitesh Mehta was dated 29-3-2012 and\nthat was for the Assessment Year 1993-94. The entire addition has been made by the\nAssessing Officer on the basis of information gathered from different sources. The\nAssessing Officer merely picked a figure from one annexure and arrived at the figure\nof addition without making any inquiry or bringing any evidence on record. If such\nadditions made by the Assessing Officer were deleted in the case of Hitesh Mehta and\nthe Revenue filed an appeal being Income Tax Appeal No.5138 of 2003, but without\n\nraising any such ground, then, there is no justification or reason for interference with\nthe findings of the Commissioner of Income Tax (Appeals).\n11. We do not think that we should allow Mr. Kotangle to raise any additional ground.\nHow the matter was approached by the Commissioner can be seen from para 20 of the\nTribunals order impugned in this case. It is apparent that information was obtained\nduring the assessment proceedings from the Reserve Bank of India, Custodian,\nBombay Stock Exchange companies and third parties about the share holding of the\nassessee. The data was analysed and the holding in the shares of the assessee was\ndetermined as on 31-3-1992. That was taken as the opening stock for the year under\nconsideration. Mr. Kotangle would submit if that is how the matter is determined and\ndecided by the Tribunal, then the closing stock for the past year would become the\nopening stock for the fresh accounting year. That is to be considered while adjudicating\nthe correctness of the entries in the Books of Account. If for that purpose an\nopportunity is given, then, the correctness of these entries can be verified from the\nsources referred above.\n12. We are unable to agree with him for the simple reason that the closing stock of the\nassessee was determined for the year under consideration - Assessment Year 1993-94,\nand on comparing the opening and closing stocks, whenever there was a difference and\nthe opening stock was higher than the closing stock, it was treated as sale and wherever\nthe closing stock was higher than the opening stock, the difference was treated as\nunexplained purchase. The Assessing Officer went about in this manner and made the\nadditions. The Commissioner was of the opinion that the information relied upon by\nthe Assessing officer was either given to the assessee during the proceedings of the\n Assessment Year 1992-93 or during the proceedings for the Assessment Year 1993-\n94. The Assessing Officer has computed the holding of shares from the information\ncollected from different sources. The argument before the Commissioner was that the\nworking of opening stock is borrowed from the working given in the Assessment Year\n1992-93, without any break-up and without any basis. That is how the Commissioner\nfaulted the exercise of the Assessing Officer. He held that how the figures of sales and\npurchases were derived by him has not been explained by the Assessing Officer. The\nAssessing Officer in the remand proceedings submitted a report, details of which are\nreferred in para 9.8 of the Commissioner's order dated 30-3-2012 impugned before the\nTribunal by the Revenue. It is clear that the Commissioner followed the findings in\nthe case of Mr. Hitesh Mehta for the Assessment Year 1993-94 and deleted the\naddition.\n13. To our mind, therefore, the Tribunal committed no error in refusing to interfere\nwith the Commissioner's order. On facts, the Commissioner was justified in making\nthe observations and reaching the above conclusion. To our mind, such and exercise\nbeing upheld by the Tribunal does not raise any substantial question of law.\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n27\n35. Respectfully following the decision of the Co-ordinate Bench and\nthe Hon'ble Jurisdictional High Court (supra), we direct the AO to delete\nthe impugned addition of Rs.1,20,79,176/-. Ground No. 1 is allowed.\n36. Ground No. 2 is not pressed before us, therefore, the same is\ndismissed as not pressed.\n37. Ground No. 3 relates to the claim of deduction on account of\ninterest expenses. Similar issue has been considered and decided by us\nfor AY 1992-93 in assessee's appeal being ITA No. 380/Mum/2023, vide\nGround No. 3 of that appeal. For our detailed discussion therein, the AO\nis directed to allow the claim of deduction of interest. Ground No. 3 is\nallowed.\n38. Ground No. 4 is levy of interest u/s 234A & 234B of the Act. The\nAO is directed to levy interest as per the relevant provisions of law up to\nthe date of filing of the original return of income.\n39.\nAccordingly, assessee's appeal for AY 1993-94, is partly allowed.\n40.\nThe grievance of the revenue for AY 1993-94 reads as under:-\n\"1.\nWhether on the facts and in the circumstances of the case, the Ld.CIT(A) was\njustified in restricting the addition to Rs.1,20,79,176/- and granting relief of\nRs.5,37,91,709/-, on account of profit on unexplained sale of shares, whereas assessee\nhad failed to explain the source of acquiring the shares satisfactorily and the books of\naccount produced by the assessee are unreliable?\n2.\nWhether on the facts and in the circumstances of the case, the Ld. CIT(A) was\njustified in granting relief of Rs.33,85,597/- on account of dividend / interest income\nwithout appreciating the fact that A.O has made disallowance on the basis of data\nprovided by Custodian and assessee failed to reconcile the same and the books of\naccount produced by the assessee are unreliable?\n3. The appellant craves to leave, to add, to amend and / or to alter any of the\nground of appeal, if need be.”\n\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 380/Mum/2023\nI.T.A. No. 1181/Mum/2023\nI.T.A. No. 462/Mum/2023\nI.T.A. No. 1182/Mum/2023\n28\n41. The first grievance relates to the restriction of the addition to Rs.\n1,20,79,176/- on account of profit on unexplained sale of shares. This\nissue has been considered by us in assessee's appeal (supra) vide Ground\nNo.
1. For our detailed discussion therein, this Ground is dismissed.\n42. Ground No. 2, relates to the grating of relief of Rs.33,85,597/- on\naccount of dividend/interest income. Similar grievance has been decided\nby us in AY 1992-93, vide ground No. 6 of that appeal. For our detailed\ndiscussion there, this Ground is dismissed.\n43. In the result, appeals of the assessee are partly allowed and that\nof the revenue are dismissed.\nOrder pronounced in the Court on 19th February, 2025 at Mumbai.\nSd/-\n(SAKTIJIT DEY)\nVICE-PRESIDENT\nMumbai, Dated 19/02/2025\n*SC SMPS\nSd/-\n(NARENDRA KUMAR BILLAIYA)\nACCOUNTANT MEMBER\nआदेश की प्रतिलिपि अग्रेषित/