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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEYAND SHRI G. MANJUNATHA
Captioned appeal has been filed by the assessee challenging the order dated 16th February 2015, passed by the learned Commissioner of Income Tax (Appeals)–34, Mumbai, pertaining to the assessment year 2010–11.
2 Shri Ashok B. Gupta (HUF)
Grounds no.1 and 2, challenging the validity of notice issued under section 148 of the Income–tax Act, 1961 (for short "the Act") are not pressed, hence, dismissed.
In grounds no.3, 4 and 5, the assessee has challenged various additions made by the Assessing Officer and sustained by learned Commissioner (Appeals).
Brief facts are, the assessee is a Hindu Undivided Family (HUF). The assessee is engaged in the business of running gymnasiums and trading in raw yarn. For the assessment year under dispute, the assessee filed its return of income on 14th October 2010, declaring total income of ` 13,08,550. A survey under section 133A of the Act was carried out in the business premises of the assessee on 31st January 2012. During the survey, certain discrepancies were found. In the course of assessment proceedings, on the basis of the discrepancies found during the survey the Assessing Officer formed the belief that income chargeable to tax to the tune of ` 3,70,96,447 has escaped assessment, initiated proceedings under section 147 of the Act. During the re–assessment proceedings, on the basis of details furnished by the assessee, the Assessing Officer issued notices under section 133(6) of the Act to various parties from whom the assessee claimed to have availed unsecured loans and also advanced loans.
3 Shri Ashok B. Gupta (HUF)
Further, he also wanted to verify the purchase and sales made by the assessee. As observed by the Assessing Officer, in response to the notices issued under section 133(6) of the Act, in many cases reply was not received. In some cases though reply was received but they were not complete. Thus, on the basis of such information, the Assessing Officer called upon the assessee to explain as to why the loan transactions and purchase and sale transactions should not be treated as bogus. Though, the assessee submitted its reply claiming that the transactions were genuine, however, the Assessing Officer was not convinced with the explanation of the assessee. On the basis of facts relating to past years, he observed that from the assessment year 2009–10 onwards every year sundry creditors were increasing. Further, he observed, though the assessee has shown closing stock of more than ` 1 crore, however, at the time of physical verification no stock was found. The assessee also failed to furnish the details called for. Thus, alleging that the assessee failed to prove the loans and advances as well as purchase and sale, the Assessing Officer made addition of an amount of ` 9,65,21,041 under section 68 of the Act. The addition made by the Assessing Officer was partly sustained by the learned Commissioner (Appeals) while deciding assessee’s appeal.
The learned Authorised Representative submitted, various submissions made by the assessee before the Assessing Officer and 4 Shri Ashok B. Gupta (HUF)
learned Commissioner (Appeals) were not considered properly. He submitted that the assessee was also not provided adequate opportunity to reconcile the difference, if any, and to remove the doubts entertained by the Departmental Authorities. Further, he submitted, while deciding identical issue in assessee’s own case for the assessment year 2009–10, vide ITA no.699/Mum./2014, dated 16th August 2016, the Tribunal has restored the issue to the Assessing Officer for fresh adjudication. Thus, he submitted, the issue may be restored back to the Assessing Officer with similar direction.
The learned Departmental Representative has no objection if the issue is restored back to the Assessing Officer for providing an opportunity to the assessee to establish the genuineness of the transactions.
We have considered rival submissions and perused material on record. In sum and substance, the limited contention of the learned Authorised Representative is to the effect that proper opportunity was not granted to the assessee to establish the genuineness of various transactions. It is observed, in the course of assessment proceedings to verify the genuineness of various loans and advances availed / given as well as purchase and sale transactions, the Assessing Officer has issued notices under section 133(6) of the Act. As per the details
5 Shri Ashok B. Gupta (HUF) tabulated in the assessment order, most of the notices issued under section 133(6) of the Act were served on the person concerned and, in many cases, replies to the notices under section 133(6) of the Act were also received. Thus, from the aforesaid facts, it appears that the persons with whom the assessee had entered into transactions are identifiable. Therefore, the only thing which remains to be established is the genuineness of the transactions along with the creditworthiness. It is the contention of the learned Authorised Representative before us that the assessee had, to the extent possible, tried to reconcile the differences / discrepancies found during the survey. He has also submitted that if proper opportunity is given, the assessee would furnish necessary evidences to prove the genuineness of transactions. Considering the above, we are inclined to restore the issue to the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. The assessee on its part should furnish all necessary evidences to establish the genuineness of the loan transactions as well as purchase and sale transactions. The Assessing Officer must consider the evidences furnished by the assessee and if he has any doubt regarding them, he must bring it to the notice of the assessee for proper reconciliation. With the aforesaid observations, we restore the issue to the Assessing Officer.
6 Shri Ashok B. Gupta (HUF)
Before parting, we must make it clear that our directions in the present appeal is only with regard to the additions sustained by the learned Commissioner (Appeals) and disputed by the assessee before us. The additions which have been deleted by the learned Commissioner (Appeals) against which the Department is not in appeal, as per the statement of the learned Departmental Representative, cannot be re–opened / revisited by the Assessing Officer. Grounds raised are allowed for statistical purposes.
In the result, appeal is partly allowed for statistical purposes. Order pronounced in the open Court on 03.07.2019