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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आयकर अऩीऱीय अधधकरण “बी” न्यायऩीठ ऩुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE श्री डी. करुणाकरा राव, ऱेखा सदस्य, एवं श्री ववकास अवस्थी, न्याययक सदस्य के समक्ष । BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM
आयकर अऩीऱ सं. / ITA No.235/PUN/2017 यनधाारण वषा / Assessment Year : 2012-13
Shri Vijay Ashok Jeswani, Shop No. 4, Harikrupa Apt., Plot No. 27, Sector 19, New Panvel, Raigad – 410206 PAN : ADZPJ7706L .......अऩीऱाथी / Appellant बनाम / V/s.
Deputy Commissioner of Income Tax, Panvel Circle ……प्रत्यथी / Respondent
Assessee by : Shri Harikrishan Revenue by : S/Shri Pankaj Garg & Sudhendu Das
सुनवाई की तारीख / Date of Hearing : 16-05-2019 घोषणा की तारीख / Date of Pronouncement : 31-07-2019 आदेश / ORDER PER VIKAS AWASTHY, JM :
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Thane dated 29-12-2016 for the assessment year 2012-13.
The brief facts of the case as emanating from records are: The assessee is engaged in sale of paints under the proprietary concern in the name and style of M/s. Vijay Paints. The assessee filed his return of
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income for the impugned assessment year on 30-09-2012 declaring total income of Rs.20,84,896/-. In the course of scrutiny assessment proceedings, the Assessing Officer made following additions/disallowances: i. Addition u/s. 68 in respect of unsecured loans Rs.56,45,000/-. ii. Disallowance of brokerage expenditure Rs.1,69,573/-. iii. Disallowance of discount allowed Rs.1,06,205/-. iv. Disallowance of VAT Rs.2,42,613/-. v. Ad hoc disallowance of repair and maintenance, telephone and travelling expenses Rs.47,946/-.
Aggrieved against the additions made in assessment order dated 23- 03-2015 passed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), the assessee filed appeal before the Commissioner of Income Tax (Appeals). The First Appellate Authority granted part relief to the assessee. Against the additions confirmed, the assessee is in second appeal before the Tribunal. In appeal before the Tribunal, the assessee has assailed the order of Commissioner of Income Tax (Appeals) on following issues : i. Addition u/s. 68 in respect of unsecured loans Rs.21,45,000/-. ii. Disallowance of brokerage/commission Rs.1,07,616/-. iii. Disallowance of discount allowed Rs.1,06,205/-. iv. Ad hoc disallowance of office expenditure.
Shri Harikrishan appearing on behalf of the assessee submitted that in ground Nos. 1 to 4 of the appeal, the assessee has assailed addition of Rs.21,45,000/- confirmed by the Commissioner of Income Tax (Appeals) u/s. 68 of the Act. The ld. AR submitted that the assessee had obtained unsecured loans to the tune of Rs.1.72 crores. The assessee furnished
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necessary details to prove genuineness of the unsecured loans. The Assessing Officer accepted all unsecured creditors except unsecured loans from 14 persons aggregating to Rs.56,45,000/-. The Assessing Officer made addition of aforesaid unsecured loans in the absence of necessary documents evidencing creditworthiness of the lenders, confirmation from parties etc. In First Appellate proceedings, the assessee produced necessary documents to show creditworthiness and genuineness of the creditors and the loan transactions. The Commissioner of Income Tax (Appeals) accepted the documents filed by the assessee in respect of 9 parties and rejected the documents qua 5 lenders. Hence, the Commissioner of Income Tax (Appeals) granted part relief to the assessee and restricted the addition to Rs.21,45,000/-. The ld. AR submitted that the reasons given by the Commissioner of Income Tax (Appeals) for rejecting 5 parties are not sustainable. The assessee had furnished PAN details, residential address, confirmations and bank statements indicating transfer of unsecured loan amounts from the bank account of creditors to the account of the assessee. The ld. AR further submitted that out of 5 creditors, the assessee had furnished Income Tax Returns for assessment year 2012-13 in respect of 3 creditors. The ld. AR submitted that the assessee has proved creditworthiness of all the loan creditors and confirmations to show genuineness of transactions. The ld. AR prayed that once, the assessee has produced necessary documents to prove genuineness of loan transactions the entire addition ought to have been deleted by the Commissioner of Income Tax (Appeals).
3.1 The ld. AR stated at the Bar that he is not pressing ground No. 5 of the appeal relating to ad hoc disallowance of office expenditure to the extent confirmed by Commissioner of Income Tax (Appeals).
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3.2 In respect of ground No. 6 of the appeal, the ld. AR fairly admitted that the additions in respect of discount allowed to various parties were not pressed before the First Appellate Authority due to smallness of the amount.
On the other hand Shri Pankaj Garg and Shri Sudhendu Das representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. DR submitted that the Commissioner of Income Tax (Appeals) after considering the documents filed before him has granted relief to the assessee to the extent unsecured loans were proved. The assessee failed to produce necessary evidences in respect of remaining 5 parties. Therefore, the addition was sustained by the Commissioner of Income Tax (Appeals) qua them.
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The assessee apart from other lenders, had also obtained unsecured loans during the period relevant to the assessment year under appeal from the following parties : Sl. No. Name of Party Amount of loan (in Rs.) 1 Poonam Jashnani 3,00,000 2 Inder V Nankani (HUF) 2,00,000 3 Inder V Nankani 2,00,000 4 Naresh Talreja 5,00,000 5 Jaya N Talreja 5,00,000 6 Sunder Builders & Developers 4,00,000 7 Mahek Vijay Jeswani 3,70,000 8 Kalpesh Shantilal Patel 6,50,000 9 Lalit Shonlal Jain 4,25,000 10 Amar Bhatia 5,00,000
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11 Dhiraj Bhatia 5,00,000 12 Hari M Bhatia 5,00,000 13 Shama Rajendra Gandhi 5,00,000 14 Surendra 2,00,000 Total 56,45,000
In the absence of confirmations and necessary evidences indicating creditworthiness of lenders and the genuineness of loan transactions, the Assessing Officer made addition in respect of aforesaid creditors. In proceedings before the Commissioner of Income Tax (Appeals), the assessee filed PAN, Address, Copies of ITRs, Bank details, etc. of the lenders along with confirmations to prove creditworthiness of creditors and genuineness of loan transactions. The Commissioner of Income Tax (Appeals) after considering the same deleted the addition in respect of 9 parties i.e. Poonam Jashnani, Inder V Nankani (HUF), Inder V Nankani, Naresh Talreja, Jaya N Talreja, Sunder Builders & Developers, Amar Bhatia, Dhiraj Bhatia and Hari M Bhatia. However, the Commissioner of Income Tax (Appeals) was not satisfied with the documents filed in respect of Mahek Vijay Jeswani, Kalpesh Shantilal Patel, Lalit Shonlal Jain, Shama Rajendra Gandhi and Surendra and hence, confirmed the addition qua unsecured loans advanced by them to the assessee.
The ld. AR pointed that in respect of aforesaid parties, the assessee had furnished loan confirmations along with PAN details, addresses, copy of acknowledgment of return of income for assessment year 2012-13 and copy of bank statements. A perusal of documents filed by the assessee proves the identity and creditworthiness of lenders. Since, all the parties have supported the contentions of assessee and have filed confirmations
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the assessee has discharged his onus to substantiate genuineness of loan transactions and creditworthiness of lenders. We find no reason to confirm the addition in respect of remaining 5 parties. Accordingly, ground Nos. 1 to 4 raised in the appeal by the assessee are allowed and the addition of Rs.21,45,000/- on account of unsecured loans is deleted. Consequently, ground Nos. 1 to 4 of the appeal by the assessee are allowed.
The ld. AR of the assessee has stated at the Bar that he is not pressing ground No. 5 of the appeal. Accordingly, the same is dismissed as not pressed.
The ground No. 6 of the appeal is with respect to addition of Rs.1,06,205/- on account of disallowance of discount allowed by the assessee. We observe that though the ground was raised in the appeal before the Commissioner of Income Tax (Appeals) assailing the addition, however, the same was not pressed by the AR of assessee due to smallness of amount involved. Once, the assessee has accepted the addition before the First Appellate Authority we find no reason to entertain the ground assailing the same addition in Second Appellate proceedings. Accordingly, ground No. 6 of the appeal by assessee is dismissed.
In ground No. 7 of the appeal the assessee has assailed disallowance of brokerage/commission Rs.1,07,616/- confirmed by the Commissioner of Income Tax (Appeals). The assessee has claimed brokerage expenses of Rs.1,52,616/- on sale of flats. The Assessing Officer has disallowed entire brokerage as claimed by assessee. The Commissioner of Income Tax (Appeals) granted part relief by estimating brokerage @ 1% of sale consideration. Undisputedly, the assessee has not filed any confirmation
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from the brokers either before the authorities below or before the Tribunal. In the absence of any material substantiating the claim, we find no reason to interfere with the findings of Commissioner of Income Tax (Appeals). The ground No. 7 of the appeal is dismissed, accordingly.
In the result, the appeal of assessee is partly allowed in the terms aforesaid.
Order pronounced on Wednesday, the 31st day of July, 2019.
Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 31st July, 2019 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-2, Thane 3. 4. The Pr. Commissioner of Income Tax-2, Thane ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच, 5. ऩुणे / DR, ITAT, “B” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,
यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune