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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI JASON P. BOAZ & SHRI SANDEEP GOSAIN
This appeal by the assessee is directed against the order of the CIT(Appeals)-18, Mumbai dated 29/10/2013 for assessment year 2009- 10.
The facts of the case, briefly, are as under:-
2.1 The assessee filed his return of income for assessment year 2009- 10 on 30/7/2009 declaring total income of Rs.6,62,360/-. The case was taken up, for scrutiny and notices under section 143(2) of the Income
(Assessment Year : 2009-10) Tax Act, 1961 ( ‘the Act’) and notice under section 142(1) alongwith questionnaire calling for certain details were issued on 11/7/2011. According to the Assessing Officer, the assessee filed only some of the details called for but failed to submit the balance details required in spite of reminders issued to the assessee. In that view of the matter, the Assessing Officer noticed, from a perusal of the Balance Sheet of the assessee as on 31/3/2009, that unsecured loans amounting to Rs.12,44,467/- was taken from three parties. Observing that the assessee had failed to file loan confirmations in this regard, the veracity of the loans could not be ascertained, held the same to be unascertained liability and brought the same to tax in the assessee’s hands. The assessment order was then completed under section 143(3) of the Act vide order dated 29/12/2011 determining the income of the assessee at Rs.19,06,830/-; in view of the additions of Rs.12,44,467/- in respect of unexplained unsecured loans appearing in the assessee’s Balance Sheet as on 31/3/2009.
2.2 Aggrieved by the order of assessment for assessment year 2009- 10, the assessee preferred an appeal before the CIT(A) -18, Mumbai. The grounds raised by the assessee before the CIT(A) are as under:-
“1. The Learned assessing officer has failed to appreciate that all amount has been outstanding in the books of assessee since long time and same were reflected in previous balance sheet also which is submitted to the Assessing Officer. 2. The confirmation of accounts are attached herewith.”
(Assessment Year : 2009-10) 2.3 The CIT(A) dismissed the assessee’s appeal holding as under at paras 1.3 of the impugned order dated 29/10/2013:-
“1.3 I have considered the submissions of the appellant order of the A.O and facts of the case carefully it is noticed that the assessee has shown unsecured loans of Rs.12,44,467/- from three different parties. The A.O has asked the assessee to submit complete details with confirmations and copies of loan accounts of these parties. But the assessee has failed to submit the confirmations and other required details although number of opportunities were provided. Thus, the A.O has treated the amount of Rs.12,44,467/- as unexplained liability and added back to the taxable income. On the other hand, the AR of the appellant has submitted that as per balance sheet it has shown unsecured loans of Rs.12,44,467/- and photo copy of three confirmation letters were also filed along with its reply without any bank statement balance and other particulars. From the perusal of the submissions and facts, it is an undisputed fact that the AO has given a number of opportunities to the assessee to submit complete details and confirmations of unsecured loans of Rs.12,44,467/- but the assessee has failed to submit confirmation before the A.O. Even during the appellate proceedings, the appellant has filed only photos copies of three confirmations which are without PAN number, bank statement and balance sheet of the concerned parties. As per the provisions of Section 68 the onus is always on the assessee to submit complete details to prove the identity, creditworthiness and genuineness of the creditor. But in the present case, the assessee has failed to submit any documentary evidence to prove these conditions. To strengthen the view of the reliance is placed on the following decision. (a) Roshan Di Hatti Vs. CIT, 107 ITR 938 (SC) (b) CIT Vs. Devi Prasad Vishwanath Prasad, 72 ITR 194(SC) (c) CIT vs. Ganapati Mudaliar, 53 ITR 623 (SC) (d) CIT vs. M.Govindarajulu Mudaliar vs. CIT, 34 ITR 807 (SC) (e) CIT vs. Durga Prasad More 72 ITR 807 (SC) (f) Sumat Dayal Vs. CIT, 214 ITR 801 (SC) In view of the facts and circumstances and various court decisions on this issue, it is held that the appellant has failed to submit any documentary evidence to prove the genuineness of unsecured loans, therefore, the addition made by the A.O is upheld and ground of appeal is dismissed.”
(Assessment Year : 2009-10) 3. Aggrieved by the order of the CIT(A) -18, Mumbai dated 29/10/2013 for assessment year 2009-10, the assessee has preferred this appeal before the Tribunal raising the following grounds:-
“1. The Honourable CIT(A) has failed to appreciate that all amount has been outstanding in the books of assessee since long time and same were reflected in previous balance sheet also were disallowed and made addition.
2. The confirmation of accounts are attached herewith. The appellant prays leave to alter, amend or add any grounds or relief before or at the time of hearing the Appeal.”
The case was fixed for hearings on atleast six occasions, but the case was either not heard on the request of the assessee for adjournment or none was present for on behalf of the assessee. On 25/8/2016 when the case was called for hearing, none was present for the assessee but the Ld. Departmental Representative was present and ready to argue the case. In the circumstances, as laid out above, we are of the considered opinion that the assessee is not interested in seriously pursuing this appeal and, therefore, proceed to dispose this appeal with the assistance of the Ld. Departmental Representative and the material on record.
The Ld. Departmental Representative was heard and he placed strong reliance on the orders of the authorities below in holding and confirming the addition of Rs.12,44,467/- in respect of unsecured loans of three parties as unexplained unsecured loans under section 68 of the Act.
6.1 We have heard the Ld. Departmental Representative and perused and carefully considered the material on record. According to the Assessing Officer , the veracity of the unsecured loans amounting to (Assessment Year : 2009-10) Rs.12,44,467/- taken from three parties, as reflected in the assessee’s balance sheet as on 31/3/2009, cannot be ascertained and, therefore, being unexplained were to be brought to tax under section 68 of the Act as income of the assessee.
6.2 On appeal, the CIT(A) has confirmed the said addition made by the Assessing Officer . We have extracted the grounds of appeal raised by the assessee before the CIT(A) in para 2.2 of this order(supra) and the CIT(A)’s finding thereon at para 2.3 of this order(supra). The reason for this extraction is that, a perusal of the grounds vis-à-vis the CIT(A)’s finding will establish that the CIT(A) has actually not addressed or adjudicated the grounds raised by the assessee. In the grounds raised before CIT(A) (supra), the assessee contends that the Assessing Officer had made the addition on account of unsecured loans outstanding in the assessee’s balance sheet as on 31/3/2009, without appreciating the fact that all the said amount of unsecured loans outstanding as on 31/3/2009 are outstanding in the assessee’s books of account for a long time and are reflected in previous years balance sheets, which have been submitted to the Assessing Officer. In our considered view a perusal of the CIT(A)’s finding in the impugned order(supra) would clearly establish that the CIT(A) has not examined, verified or addressed the ground raised by the assessee and regrettably without any application of mind has parroted the finding of of the CIT(A). This finding in our view, is a travesty justice and in the facts and circumstances of the case as laid out above, the impugned order of the CIT(A) becomes unsustainable, as he has failed to examine and verify the contentions put forth by the assessee in the ground raised before him. In the event the said unsecured loans from three parties
(Assessment Year : 2009-10) are found to be old loans and pertain to a period prior to the year under consideration, as contended by the assessee, then the addition under section 68 of the Act as upheld by the CIT(A) cannot be made or sustained. In this view of the matter, we are constrained in the interest of equity and justice to set aside the finding in the impugned order of the CIT(A) and restore the matter to his file to consider and adjudicate the grounds raised before him (supra) after causing necessary enquires in the matter and after affording the assessee adequate opportunity of being heard and to file details/submissions in this regard. We hold and direct accordingly. Consequently, grounds raised by the assessee are allowed for statistical purposes.
In the result, the assessee’s appeal for assessment year 2009-10 is treated as allowed for statistical purposes.
Order pronounced in the open court on 16/09/2016