BHAVESH RAMNIKLAL VORA HUF,MUMBAI vs. ITO WD 19(3)(1), KALYAN

O R D E R Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-32, Mumbai (‘ld.CIT(A) for short) dated 10.06.2016 and pertains to the assessment year (A.Y.) 2011-12.

read as under:

3. Brief facts of the case are that the assessee is a Hindu Undivided Family (HUF) stated to be engaged in the business of F & O. On perusal of return, A.O. noted that the assessee has shown his total income at Rs.1,27,26,030/-, however, after setting off of brought forwarded losses pertaining to A.Y. 2010-11 of Rs.5,62,16,190/-, the taxable total income for the year under consideration was declared at NIL. In this case, there was M/s. Bhavesh Ramniklal Vora HUF vs. ITO also information on ÄIR regarding assessee’s deposits of cash to the tune of Rs.90.80 lakhs in the accounts held with Bank of India. It was also found that the assessee has also claimed unsecured loans at Rs.4,69,67,600/- in his balance sheet as on 31.03.2011.

4. Apropos the issue of unsecured loan, the Assessing Officer made the addition in absence of compliance by the assessee. The A.O. observed as under: 5.2 In this case, there was information on AIR regarding assessee’s deposits of cash to the tune of Rs.90.80 lakhs in his accounts held with Bank of India. The assessee during the course of hearing was asked to explain the nature and source of cash deposits made by him. In response, it was explained that it was made out of cash payment received on providing his advisory services (F&O) to various persons. The assessee was, therefore, asked to provide the full details of his advisory services with supporting documentary evidences and also the details giving the name and complete addresses to the person/parties to whom such advisory services are provided along with the amount charged and the nature of services render, in order to verify the same. The assessee was also asked to furnish the details of his educational qualification to justify his above case. In response, the assessee has furnished only the sheets showing the details of fees for advisory services received on the weekly basis for the period from 01.04.2010 to 13.05.2010 only, aggregating to Rs.5,05,704/-. On its perusal, it was further observed that the assessee has mentioned therein only the name of the person, area of residence such as Dadar (W), Bandra (E), etc. and amount charged. However, no any detail showing nature of services rendered, proof for receipt of fees etc. has been filed in support of claim. Even the basis details viz. the full address of the person, PAN has not been filed. Thus, the primary onus to prove the genuineness of the transaction and the identity of these persons has not been discharged by the assessee.

5. Upon the assessee’s appeal, the ld. CIT(A) referred to the additional evidences submitted by the assessee. He noted that in remand, the A.O. has submitted not to admit the additional evidence. However, the ld. CIT(A) accepted them and proceeded to accept the same.

6. He adjudicated the issue after accepting the concession by the assessee. He held as under: 6.1.1 I find that out of total loans of Rs.4,69,67,600/- the appellant has been able to produce confirmation of only Rs.4,23,57,053/-. In his written submissions dt. 27.11.2015 the appellant has admitted that loan confirmations from three parties totaling to RS.46,10,548/- have not been produced by him. During the course of hearing on 09.06.2016, the AR also conceded that confirmation of loan for M/s. Bhavesh Ramniklal Vora HUF vs. ITO Rs.46,10,548/- are not available and that the same may be assessed as income. Apart from this the A.O. in his remand report has also pointed out that he had issued notices u/s.133(6) to the 13 parties during remand proceedings. Out of these notices issued to four parties viz. (Shri Jignesh Sheth – Rs.3,58,000/-, Prakash Kadam – RS.7,00,000/-, Pratibha Kamam-Rs.24,00,000 & Unique creation – Rs.2,51,43,781/-) have been returned by the postal authorities with the remakrs “left/not claimed”. The A.O. has also pointed out that in the case of one of the loan creditors Mrs. Nutan Vora, who stated to have given a loan of Rs.7,40,000, there is a case deposit of Rs.4,00,000/- in her bank account on 11.03.2011 and on the same date she has issued a cheque to the assessee. Similarly on 23.03.2011 there is a cash deposit of Rs.2,00,000 in her bank account and a cheque of the same amount has been issued to the appellant. The A.O. also pointed out that Nutan Vora has not filed here return of income. The A.O. further pointed out that in the case of Unique Creation there have been certain cash deposits after which cheques have been issued to the appellant. A copy of this remand report was handed over to the appellant requesting him for a rejoinder. 6.1.2 During the course of hearing on 09.06.2016 the AR submitted that confirmation from three unrelated parties viz. Shri Jignesh Sheth – Rs.3,58,000, Prakash Kadam – Rs.7,00,000 & Pratibha Kadam – Rs.24,00,000 which were submitted as additional evidence could not be substantiated by him during the remand proceedings. The AR, therefore, conceded that these loans cannot be substantiated by him. Similarly, in the case of Nutan Vora, the AR conceded the matter. From the above, it could be seen that the appellant has conceded that he is not able to produce any confirmation or any details regarding loans availed of Rs.46,10,548 from three parties as well as loan of Rs.3,58,000 from Jignesh Sheth, Rs.7,00,000 from Prakash Kadam, Rs.24,00,000 from Pratibha Kadam & Ntuan Vora Rs.7,40,000. I have considered the explanation in respect of Unique creation and the same appears reasonable and substantiated. I also find that the A.O. in his remand report seems to have accepted the other loan creditors. I therefore hold that the addition of Rs.4,69,67,600 is to be restricted to Rs.88,08,548 (Rs.46,10,548 + Rs.3,58,000 + Rs.7,00,000 + Rs.7,40,000). The A.O. is directed accordingly and ground no.1 is partly allowed.

M/s. Bhavesh Ramniklal Vora HUF vs. ITO before the ld. CIT(A) with respect to some of the loans remaining unconfirmed, the assessee has raised an appeal. Moreover, despite noting that the A.O. has observed that the additional evidence should not be admitted, the ld. CIT(A) has held that the A.O. in his remand report seems to have accepted the other loan creditors. Hence, we find that this is obvious contradiction in CIT(A)’s observation. Hence, in the interest of justice, we set aside the issue to the file of A.O. for consideration anew.