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Income Tax Appellate Tribunal, “A ”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM Shri Amit G Vanani
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)- 40, Mumbai dated 15/10/2013 for A.Y. 2008-09 in the matter of order passed u/s.144 of the IT Act, 1961. 2. The following grounds have been taken by the assessee:-
1. The Commissioner (Appeals) erred in confirming the addition of Rs.5,50,66,204/- as unexplained cash credits u/s. 68 of the I.T. Act 1961.
2. The Commissioner (Appeals) failed to appreciate that the assessee had filed loan confirmations of all the parties with their names, addresses and permanent account numbers and therefore, in the remand proceedings the Assessing Officer ought to have summoned Shri Amit G.Vanani these parties for verifying the genuineness of the transactions and creditworthiness of these parties.
3. The Commissioner (Appeals) failed to appreciate that in the remand proceedings the Assessing Officer ought to have verified the genuineness of the transaction and creditworthiness of these parties from the records of the Income-tax Department as the Assessee had given the Permanent Account Numbers of each of these parties.
4. The Commissioner (Appeals) erred in observing that non-payment of interest gives rise to suspicion about the genuineness of the transactions.
5. The Commissioner (Appeals) referring to the confirmation of all the parties for the year ended 31st March 2008 erred in observing that with all the parties there was only one way flow of funds and there was no entry of returning the money or part of the money by the Assessee to such creditors.
6. The Commissioner (Appeals) failed to appreciate that the assessee had received funds from these parties during the year ended 31st March 2008 and therefore, the assessee must have returned the said money to these parties in the subsequent years.
7. The order of the Commissioner (Appeals) confirming the addition of Rs.5,50,66,204/- is bad in law and without jurisdiction.
8. Your Appellant craves leave to add to, alter, amend or delete any of the foregoing grounds of appeal.
Rival contentions have been heard and record perused.
Briefly stated, the facts of the case are that the assessee is a partner in the firms M/s. Niru Creations. M/s. Niru Diamonds and M/s. Niru Impex, which are engaged in the business of dealing in diamonds, etc., The assessee filed his return of income for the year under consideration on 30/3/2010, declaring nil income. The case was picked up for scrutiny and various opportunities of being heard were given to the appellant to clarify issues relating to the income declared in the return of income.
Shri Amit G.Vanani However, the assessee failed to furnish necessary clarifications to the AO. The AO, accordingly, completed the assessment u/s.144 of the I.T. Act. (while completing the assessment a/s.144, to his best judgment, the AO added a sum of Rs.1,57,87,775/- as income from other sources, which was shown by the assessee as F & O income, long-term capital gain, short-term capital gain and dividend income. Further, he made an addition of Rs.5,50,66,204/-, as unexplained loans received during the year, in accordance with the provisions of Sec.68 of the Act, since the appellant failed to furnish confirmation from the parties as also other supporting details. Besides, the AO also rejected the claim of the appellant towards carry forward of short-term capital loss of Rs.17,89,387/-. Thus, the AO assessed the total income of the assessee for the year at Rs.7,08,61,730/-, vide order u/s.144 dated 24/12/2010, as against nil income returned by the assessee.
By the impugned order, CIT(A) deleted the addition made on account of short term capital gains, F & O income and long term capital gains. However, addition on account of loan creditor was confirmed by the CIT(A). Assessee is in further appeal before us against the confirmation of loan creditor.
It was argued by learned AR that the Commissioner (Appeals) failed to appreciate that the assessee had filed loan confirmations of all the parties with their names, addresses and permanent account numbers and therefore, in the remand proceedings the Assessing Officer ought to have Shri Amit G.Vanani summoned these parties for verifying the genuineness of the transactions and creditworthiness of these parties.
Learned AR also invited our attention to the remand proceedings, wherein AO has not verified the genuineness of transaction and credit worthiness of these parties from the record of Income Tax Department since assessee has already given permanent account of each of these parties.
Learned AR also invited our attention to the confirmations filed by each and every party and also details of repayment of loan to these creditors.
On the other hand, learned DR relied on the order of the AO.
We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that exparte order was framed by AO u/s.144. During the course of appellate proceedings, vide letter dated 20/1/2012, the assessee furnished certain additional evidences in the form of copies of confirmations, etc. from loan creditors as also the details of share transactions from stock brokers end copies of bank statements, etc. These details were forwarded to the AO by CIT(A) vide letter dated 15/3/2012, for specific comments regarding admissibility as also the merits of the additional evidence. The AO submitted his remand report vide letter dated 30/10/2012, in which he objected to admission of fresh evidence, on the ground that the assessee had not given sufficient reasons as to what prevented him from submitting these evidences before him earlier at assessment stage. However, no comments Shri Amit G.Vanani were given by the AO regarding merits of the additional evidences. Therefore, vide office letter dated 5/11/2012, the Addl. CIT, Central Range-7, Mumbai, was informed that the report of the AO was silent about the merits of the various evidences furnished by the assessee, and he was requested to ensure that the report as called for is submitted by the AO. In response, the AO submitted a supplementary report vide letter dated 14/11/2012. However, it was noticed that in this report also, the AO had not covered all the issues. Accordingly, vide office letter dated 20/11/2012, the AO was again directed by CIT(A) to submit a complete remand report after carrying out verification of the additional evidence filed, if necessary, by conducting requisite enquiries and affording opportunity of being heard to the assessee. In response to the said directions, the AO submitted the final remand report vide letter dated 12/7/2013, which is reproduced as under :- “Unsecured loan u/c.68 of Rs.5,50,66,204/- : In the balance sheet for F.Y. 2006-07, it is seen that the assessee's loan liability has increased to Rs.23,13,54,982/- from Rs.17,62,88,778/-. During the course of assessment proceedings vide this office questionnaire dated 19.10.2010, the assessee was requested to file loan confirmation letters in support of loan taken. Further, vide this office order sheet notice dated 02.12.2010 the assessee was a/so requested to file loan confirmation letters in support of loan taken. Therefore, AO added unsecured of Rs.5,50,66,204/- total income of the assessee. The AO findings: The AO has come to this figure by referring to 2 balance sheets, he has added as at that time he had no material in favour of the assessee not to add the unsecured loan. It seems he has added as he was framing the assessment and obviously cannot take chance. However, the fact is that they are appearing in balance sheet and therefore apparently books are not rejected and the proofs subsequently given to CIT(A) may be considered, more so because of the following : • All confirmations given to CIT(A) • All ledger accounts are given to CIT(A) with narrations for each entry with cheque nos. in these narration.
Shri Amit G.Vanani • The copy of passbook does reveal the receipts through banking channels. • The fact that the assessee has filed the balance sheet, the borrowing of unsecured loans does come out of the existing a/cs. During the assessment proceedings, the AO had vide order sheet notings given ample opportunity to the assessee to furnish the requisite details in support of its various claims. The assessee was merely withholding the information called for by asking for adjournments which were granted by the AO. As per the statute the date of finalization of assessment was 31st December, 2010. The assessee was given ample opportunities as has been clear from the body of the assessment order which has been mentioned by the AO. The assessee has time and again not complied with its statutory obligations which were called for by issue of notices u/s. 143(2) and 142(1} of the I.T. Act, 1961. Filing of partial details cannot serve the purpose of justice as stated by the assessee in the additional evidence submitted before your honour. The assessee's furnishing of details before your honour and not submitting the same before the AO during assessment proceedings will not help the cause of the assessee. However, it is requested to kindly take decision on merits."