Income Tax Appellate Tribunal - Mumbai
Rahul Ship Breaking Co., Mumbai vs Assessee on 8 July, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "D", MUMBAI
BEFORE SHRI R.V. EASWAR, PRESIDENT & SHRI R.K.PANDA, AM
I.T.(SS)A. No. 62/Mum/2007
(Block period: 1996-97 to 2002-03)
M/s. Rahul Ship Breaking Co. Vs. The ACIT-Range 17(1)
C/o. Mr. Rajeev Kumar Jain 2nd Floor,
B 403/404, Green Acres, Piramal Chambers,
Lokhandwala Complex, Andheri Lalbaug,
(West), Mumbai-400 053 Mumbai-400 012
PAN:AAAFR5823N
Appellant Respondent
I.T.(SS)A. No. 91/Mum/2007
(Block period: 1996-97 to 2002-03)
The DCIT-17(1), Mumbai Vs. M/s. Rahul Ship Breaking Co.
C/o. ACIT-Range 17(1) C/o. Mr. Rajeev Kumar Jain
2nd Floor, Piramal Chambers, B 403/404, Green Acres,
Lalbaug, Mumbai-400 012 Lokhandwala Complex,
Andheri (West), Mumbai-53
PAN:AAAFR5823N
Appellant Respondent
Assessee by : Shri Subhash S. Shetty
Revenue by : Shri Sumeet Kumar
ORDER
Date of hearing: 08.07.2010
Date of order: 16.07.2010
PER R.K. PANDA, AM,
These are cross appeals, the first one filed by the assessee and the second one filed by the Revenue and are directed against the order dated 8th March, 2007 of the CIT(A)-XVII, Mumbai relating to the block period 1996-97 to 2002-03. For the sake of convenience both the appeals were heard together and are being disposed of by this common order.
2. This appeal was earlier dismissed by the Tribunal for non- appearance. Subsequently the Tribunal vide order dated 21.5.2010 in M.A. No. 54/Mum/2010 recalled its earlier order. Hence this is a recalled matter.
2 IT(SS)A Nos. 62 & 91/Mum/2007M/s. Rahul Ship Breaking Co.
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3. Facts of the case, in brief, are that a search and seizure action u/s. 132(1) of Income-tax Act, 1961 (the Act) was conducted in the case of Roshanlal Agarwal group on 19th and 20th March, 2002. During the course of block assessment proceedings of Roshanlal Agarwal group the Assessing Officer found that the name of M/s. Rahul Ship Breaking Co. i.e., the assessee, is appearing at page 7 of Annexure A2 of loose paper file according to which the assessee i.e., M/s. Rahul Ship Breaking Co., had received Rs. 10 lakhs from Shri Roshanlal Agarwal. The Assessing Officer of Roshanlal Agarwal group sent information to the Assessing Officer having jurisdiction over the assessee who issued notice u/s. 158BD to the assessee. In response to such notice u/s. 158BD, the assessee filed 'nil' undisclosed income for the block period.
4. During the course of block assessment proceedings the Assessing Officer confronted the seized material to the assessee. During the course of block assessment proceedings, a statement of Shri Rajeev Kumar Jain, partner of M/s. Rahul Ship Breaking Co. was recorded who in reply to question no. 2 has stated that page No. 7 of file A/2 has been signed by him but he has not received any amount from Mr. Rohanlal Agarwal. He has further stated that he has signed because he had to take loan from Mr. Roshanlal Agarwal and the amount of loan was never received by him on behalf of the company M/s. Rahul Ship Breaking Co.. Subsequently the Assessing Officer confronted the statement of Mr. Roshanlal Agarwal to the assessee which was recorded on 2nd April, 2002 wherein Shri Roshanlal Agarwal on being asked to explain the nature and contents of the notings on these papers had stated that as per his view his son has forwarded cash loans to these parties who have given hundies to them out of unexplained cash sources. The assessee in his reply denied to have received such hundi loans from Roshanlal Agarwal group.
5. However, the Assessing Officer was not satisfied with the explanations given by the assessee. He noted that the Assessing Officer having jurisdiction over Roshanlal Agarwal group vide letter dated 27th 3 IT(SS)A Nos. 62 & 91/Mum/2007 M/s. Rahul Ship Breaking Co.
============================ April, 2004 has stated that Shri Roshanlal Agarwal has given loan of Rs.3 lakhs in cash to M/s. Rahul Ship Breaking Co. The statement of Shri Rajeev Kumar Jain, partner of M/s. Rahul Ship Breaking Co. was recorded u/s. 131 of the Act wherein he has admitted to have signed the paper and the amount of Rs. 3 lakhs has been offered by Shri Roshanlal Agarwal as his undisclosed income in the return for the block period. He accordingly rejected the explanation offered by the assessee and added an amount of Rs. 3 lakhs as undisclosed income of the assessee for the block period on protective basis u/s. 69D of the Act and the balance amount of Rs. 7 lakhs was added on substantive basis u/s. 69D of the Act. The Assessing Officer further added an amount of Rs.10,50,000 being interest chargeable on Rs.10 Lakhs @ 15% per annum from the beginning of the block period i.e., 1st April, 1995 till the date of search i.e., 20th March, 2002 on the ground that the date of receipt of loan is not available.
6. In appeal the learned CIT(A) sustained the addition of Rs. 10 lakhs by holding as under:
"4.1 As mentioned earlier the appellant had borrowed a sum of Rs.10 lakhs vide bill of exchange dt. 13.3.02 from Shri Roshanlal Agarwal and the partner of M/s. Rahul Ship Breaking Co. has signed this bill of exchange, the copy of which is available on record and shown to the appellant's AR and the same is as per page-7 of seized document A-2 in the case of Shri Roshanlal Agarwal. Though the appellant had argued that it was not complete since it was not signed on the stamp paper etc., it is very clear that the appellant had borrowed this money by cash as could be seen from the appellant's partner's signature on this piece of paper as also the other party Shri Roshanlal Agarwal has admitted the same while filing the block return and the same has been assessed in the block return which was confirmed by CIT(A) vide his order dt.8.4.04. These papers and the circumstantial evidence along with the original evidence clearly indicate that the money was received in cash wherein provisions of sec. 60D were applicable. Though the appellant has stated that it was not full and complete since the paper has been corroborated by the acceptance of the lender, there is nothing to indicate that the transaction had not taken place and in view of acceptance of the lender, the same is regarded as income of the appellant in 4 IT(SS)A Nos. 62 & 91/Mum/2007 M/s. Rahul Ship Breaking Co.
============================ view of the special provisions of Income-tax u/s. 69D and the A.O's order on this issue is confirmed.
4.2 However, it is seen that in the block assessment AO has stated that Rs.7 lakhs is added on substantive basis and Rs.3 lakhs is added on protective basis. There is no concrete evidence for this and the documents clearly indicate that the entire sum of Rs. 1 lakhs has been taken by the lender and it has been accepted by the appellant and hence the same is directed to be treated as substantive assessment of the entire Rs.10 lakhs. Hence addition of Rs.10 lakhs is confirmed."
7. However, as regards the addition of interest of Rs.10.50 lakhs, he deleted the same on the ground that the seized document itself shows that the date of document is 13th March, 2002 and, therefore, the order of the Assessing Officer is contrary to the facts and against his own conclusion.
8. Aggrieved with such part relief by CIT(A) both the assessee and the Revenue are in appeal before us. The assessee in its grounds has challenged the order of the CIT(A) in sustaining the addition of Rs.10.00 lakhs whereas the Revenue in its appeal has challenged the order of the CIT(A) in deleting the interest of Rs.10.50 lakh.
9. The learned counsel for the assessee while strongly assailing the order of the CIT(A) submitted that neither the statement of the son of Shri Roshanlal Agarwal was given to the assessee nor the assessee was allowed to confront/cross examine the son of Shri Roshanlal Agarwal. Referring to the copy of the hundi seized from the premises of Roshanlal Agarwal group, a copy of which is placed at Paper Book page 17, he submitted that although the assessee had signed the same the fact remains that it is an incomplete document since the name and address of the assessee is nowhere mentioned. Therefore, reliance cannot be placed on an incomplete document. Referring to page 18 of the Paper Book which is the copy of the statement of Shri Rajeev Kumar Jain, partner of the assessee firm, he submitted that the partner of the firm in his statement recorded u/s. 131 on 6th April, 2004 had categorically stated that 5 IT(SS)A Nos. 62 & 91/Mum/2007 M/s. Rahul Ship Breaking Co.
============================ the paper was signed because he had to take loan from Shri Roshanlal Agarwal and the amount of loan was never received b y him on behalf of M/s. Rahul Ship Breaking Co.. Therefore, no addition at all should have been made. In his alternative contention, he submitted that the Assessing Officer has given a finding that Shri Roshanlal Agarwal has disclosed only Rs.3 lakhs as his undisclosed income for the block period and the assessment has been finalised by the Assessing Officer u/s. 158BC of the Act. Therefore, only an amount of Rs.3 lakhs at best can be added and not Rs.10 lakhs.
10. As regards the deletion of the interest amount of Rs.10.5 lakhs, the learned counsel for the assessee while supporting the order of the CIT(A), submitted that the copy of the seized document shows the date as 13th March, 2002. Therefore, charging of interest for the period from 1.4.1995 till 20th March, 2002 is nothing but the highhandedness and arbitrary nature of the Assessing Officer. He accordingly supported the order of the CIT(A) on the issue of deletion of interest.
11. The learned DR, on the other hand, while supporting the order of the CIT(A) on the issue of sustaining the addition of Rs.10 lakhs submitted that the hundi seized from the premises of Roshanlal Agarwal group was duly signed by the partner of the assessee firm who had also confirmed the same. Merely because complete name and address of the assessee is not written on the hundi the same cannot be discarded. Further, the CIT(A) has given a finding that zerox copy of page 9 of the seized document, block return copy of Shri Roshanlal Agarwal, the block assessment order of Roshanlal Agarwal group, copy of appellate order, etc., were shown to the assessee's representative Shri Kiran Mehta, according to which Shri Roshanlal Agarwal had declared Rs. 44 lakhs which includes the unaccounted advance made to M/s. Rahul Ship Breaking Co. at Rs.10 lakhs. Since Shri Roshanlal Agarwal has declared Rs.10 lakhs being the unaccounted advance made to M/s. Rahul Ship Breaking Co. and since the hundi was duly signed by the partner of the 6 IT(SS)A Nos. 62 & 91/Mum/2007 M/s. Rahul Ship Breaking Co.
============================ assessee was found from the premises of Roshanlal Agarwal group, therefore, addition of Rs.10 lakhs u/s. 69D of the Act for accepting the loan in cash is justified. As far as the deletion of interest is concerned, he submitted that since the hundi is for a small period as admitted by the assessee company, therefore, it is quite possible that he might have taken the loan in the past and must be renewing the same from time to time and, therefore, the CIT(A) was not justified in deleting the interest of Rs.10.5 lakhs.
12. We have carefully considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. There is no dispute to the fact that the seized document at page 7 of Annexure A/2 of the loose paper file seized from Roshanlal Agarwal group shows a hundi loan of Rs.10 lakhs on 13th March, 2002. Further there is also no dispute to the fact that the partner of the assessee company who has signed the hundi has also confirmed to have signed the same. It is the submission of the learned counsel for the assessee that the assessee had only intended to take the loan and no such loan has been received by the assessee company. In our opinion, it is hard to believe that a paper duly signed on revenue stamp by the partner of the assessee company can be found from the premises of another person without actual receipt of money. Further we find the CIT(A) has given a finding that the Roshanlal Agarwal group had declared undisclosed income of Rs. 44 lakhs which includes the unaccounted advance of Rs.10 lakhs made to M/s. Rahul Ship Breaking Co. documents of which were shown to the AR of the assessee company by the CIT(A). We, therefore, do not find much force in the alternate contention of the learned counsel for the assessee that an addition of Rs. 3 lakhs at best only can be made since the Assessing Officer has given a finding that Rs. 3 lakhs only was declared as undisclosed income in the block return of Shri Roshanlal Agarwal. Since the hundi containing the figure of Rs.10 lakhs was found from the premises of Roshanlal Agarwal group which was duly 7 IT(SS)A Nos. 62 & 91/Mum/2007 M/s. Rahul Ship Breaking Co.
============================ signed by the partner of the assessee company and since copies of block return, block assessment order and appellate order of Shri Roshanlal Agarwal were confronted to the AR of the assessee company by the CIT(A) to show that Rs. 10 lakhs has been offered by Shri Roshanlal Agarwal in the block return as the unaccounted advance to M/s. Rahul Ship Breaking Co., therefore, we do not find any infirmity in the order of the CIT(A) and accordingly uphold the same.
13. As regards the submission of the learned counsel for the assessee that there are inconsistencies in the orders of the Assessing Officer and the CIT(A), we do not find much force in the same since all relevant documents which were called for by the CIT(A) were shown to the AR of the assessee company who had nothing more to say on this issue. The assessee company has also not filed any affidavit to show that the CIT(A) has neither shown those documents to the AR of the assessee containing the disclosure of Rs.10 lakhs by Roshanlal Agarwal group being the unaccounted advance of Rs.10 lakhs made to M/s. Rahul Ship Breaking Co. or the documents shown to the AR contain disclosure of Rs. 3 lakhs and not Rs. 10 lakhs. In this view of the matter, we do not find any infirmity in the order of the CIT(A) sustaining the addition of Rs.10 lakhs. The grounds raised by the assessee are accordingly dismissed.
14. As regards the Revenue's grounds are concerned regarding the deletion of Rs.10.5 lakhs, we do not find any infirmity in the order of the CIT(A) deleting the addition. Admittedly, the seized document shows the date as 13th March, 2002 for the hundi loan of Rs.10 lakhs. The Assessing Officer has also mentioned more than once in his assessment order as the date being 13th March, 2002. Therefore, in absence of any other material before the Assessing Officer, he could not have presumed that the assessee has taken hundi loan prior to this date. Therefore, charging of interest @ 15% per annum for the period from 1.4.1995 till 20th March, 2002, in our opinion, was not at all justified. We, therefore, do not find any infirmity in the order of the CIT(A) deleting the addition of such interest of 8 IT(SS)A Nos. 62 & 91/Mum/2007 M/s. Rahul Ship Breaking Co.
============================ Rs.10.5 lakhs made by the Assessing Officer purely on presumptions, surmises and conjectures. The grounds of Revenue on this issue are accordingly dismissed.
15. In the result, the appeals filed by the assessee as well as the Revenue are dismissed.
Pronounced in the open court on 16th July, 2010.
Sd/- Sd/-
(R.V. EASWAR) (R.K. PANDA)
PRESIDENT ACCOUNTANT MEMBER
Mumbai, dated 16th July, 2010
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)-XVII, Mumbai
4. The CIT, MC-17, Mumbai
5. The DR "D" Bench.
//True copy//
BY ORDER
ASSISTANT REGISTRAR
ITAT Mumbai Benches, Mumbai
Tprao