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Income Tax Appellate Tribunal, D Bench, Mumbai
Before: Shri P K Bansal & Shri Ravish Sood
Per P.K. Bansal, Vice President
This appeal has been filed by the Revenue against the order of the CIT(A)-29, Mumbai dated 26.12.2013 for A.Y. 2007-08.
The only issue involved in this appeal relates to the deletion of addition of `90,88,980/- out of the capital introduced amounting to `1,97,68,280/-.
2. The brief facts of the case are that the assessee that during the course of survey operation taken place at the business premises of the assessee on 30.08.2007 a statement of the partner Shri Dinesh V. Sanjai was recorded and from his the source of the capital introduced in the assessee firm amounting to `1,97,68,280/- was asked for. It was stated that a sum of `90,88,980/- was received from his father but in the absence of exact source explained by the assessee at that moment the assessee offered it for taxation. The assessee submitted his return of income declaring an income of `10,37,629/- The AO completed the assessment
M/s. Quality Apparels under Section 143(3) adding the said sum of `90,88,980/- in his total income. Subsequently the matter went in appeal before the CIT(A) and the CIT(A) upheld the addition.
We heard the rival submissions and carefully considered the same along with the order of the Tax Authorities below. We noted that the CIT(A) deleted the said addition by holding as under: -
16. From the facts stated above, it is clear that the appellant had declared an amount of Rs. 90,88,9807- during the course of survey at his premises on 30/08/2007. During the course of survey, the statement of the Shri Dinesh V. Sajnani, proprietor M/s Quality Apparels was recorded. At question no.9 & 10, Shri Dinesh V. Sajnani was asked to explain the source of the capital introduction of Rs. 1,97,68,2507- in the business during the year under consideration. The questions no. 9 & 10 is reproduced as under:- Q.9. Your capital a/c. for the financial year 2006-07 shows Rs.1,97,68,250/-. This shows a substantial increase in your capital account. How can you explain this? Ans: I am showing the Xerox copy of the cheque given by my father for an amount of Rs. 90,88,980/-. This amount is included in my capital. That's the reason why my capital a/c. is inflated. Q.10. But the cheque No.315296 dated Nov 2005 for the said amount was given to Qualiti Apparels i.e. to AOP as on date. So how it is capital account? Ans: I am not aware of this fact. As I cannot substantiate the amount paid/given to me or to my account, I agree that the amount does not belong to me or not credited to my account Therefore, I declare the amount of Rs. 90,88,950/- as an unexplained investment for the a/c year 2006-07 relevant to the A. Y. 2007-08 and pay the taxes accordingly.
It is clear from the above statement of Shri Dinesh V. Sajnani that he could not give satisfactory answer to the above question regarding the credit of Rs.90,88,9807-and therefore agreed for a surrender of Rs.90,88,9807- taken from father and introduced in the capital during the period under consideration. .No other question the source of credit to the capital account has been assessed except the te.90,88,9807-, which was given by the father of the partner Shri Dinesh V.Sajnani and credited to the account of M/s. Quality Apparels on 04/11/2005. It was in the state of confusion during the survey that Shri Dinesh V. Sajnani could not recall the exact details of the amount of Rs.90,88,980/- credited to the account of the firm but it was definitely M/s. Quality Apparels stated that the money was received from his father. The amount surrendered as per the statement recorded during the course of survey was Rs.90,88,980/-, which is received from his father by Shri Dinesh V.Sajnani, the partner of the firm.
Later on it was realized by the Shri Dinesh V. Sajnani that the above amount Rs. 90,80,980/- taken from father Shri Vashdev L. Sajnani, who had given this amount after taking loan of Rs.91,00,000/- from State Bank of India. In support of the above, the appellant also furnished the loan sanctioning letter dated 29/10/2005 of State Bank of India in the name of his father and also a copy of the cheque of Rs. 90,80,980/- in favour of M/s Quality Apparels and further the copy of the bank statement of M/s Quality Apparels showing the credit of this money in the account on 04/11/2005.
The AO has made the addition of Rs. 90,88,980/-, the amount which was declared during the course of survey u/s 133A as additional income, which is mentioned at the end of the order in the computation of the total income. The explanation regarding the source of this money received is fully explained and duly supported by the documentary evidences like the bank statement from where the money is credited and given to the firm as outlined in detail in the preceding paras. There is no confusions regarding the credit of this amount of Rs. 90,80,980/- in the books of the firm and therefore there is no question of treating this as unexplained money.
Further, the addition of this money cannot be made to the income of the assessee firm as the money has been introduced in the books of the firm on 04/11/2005, which falls in the F.Y. 2005-06 relevant to A.Y. 2006-07. The matter need to be examined in the case of the appellant firm in the A.Y. 2006-07 and no addition on this issue can be made to the income of the assessee firm in the current year i.e A.Y. 2007-08.
In view of the facts and circumstances explained above, in my considered, the addition made to the income of the assessee firm amounting to of Rs. - during the period relevant to the A.Y. 2007-08 is not warranted firstly as the source of money is fully explained and secondly the introduction of this money is in the F.Y. 2005-06 relevant to A.Y. 2007-08. The addition made, therefore, amounting to Rs.90,80,980/- in the A.Y. 2007-08 is hereby deleted.”
2. The learned D.R. even though vehemently relied on the order of the AO but could not adduce any cogent material or evidence which may prove that the father of Shri Dinesh V. Sanjai, who had given the said amount to him has taken loan of `91,00,000/- from State Bank of India. In view of M/s. Quality Apparels this fact we do not find any illegality or infirmity in the order of the CIT(A). We, therefore, confirm the order of the CIT(A).
3. In the result, the appeal filed by the Revenue is dismissed.