Income Tax Appellate Tribunal - Mumbai
Kaypanexports P.Ltd Formlery Known As ... vs Ito-6(2)(4), Mumbai on 19 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "H" MUMBAI
BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND
SHRI N.K. PRADHAN (ACCOUNTANT MEMBER)
ITA No. 2944/MUM/2011
Assessment Year: 2006-07
M/s Kaypan Exports Pvt. The Income Tax
Ltd. 2, Vardhaman Officer-6(2)(4),
Complex, LBS Marg, Vs. Aayakar Bhavan M.K.
Vikhroli (West), Mumbai- Road, Churchgate,
400083. Mumbai-400020
PAN No. AAACK3404B
Appellant Respondent
Assessee by : Ms. Dinkle Hariya, AR
Revenue by : Mr. Sachchidanand Dube, DR
Date of Hearing : 07/09/2018
Date of pronouncement : 19/09/2018
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-12 [in short 'CIT(A)'], Mumbai and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the 'Act').
2. The grounds of appeal filed by the assessee read as under:
i. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in rejecting the appellant submission regarding the receipt of Rs.14,60,052/- was on account of the recovery of sale proceeds of the M/s Kaypan Exports 2 ITA No. 2944/Mum/2014 Sister Concern M/s Kaypan Vanijya Pvt. Ltd., not as a loan from Shri Balwantbhai Grewal.
ii. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition of Rs.14,60,052/- as income from other sources u/s 68 of the Income Tax Act, 1961.
3. Briefly stated, the facts of the case are that the appellant-company had taken unsecured loan of Rs.14,60,052/- from Mr. Balwantbhai Grewal during the year under consideration. During the course of assessment proceedings, the Assessing Officer (AO) asked the appellant to furnish a copy of the loan confirmation, return of income, bank statement of loanee and balance sheet in respect of fresh loans taken during the year. The appellant failed to furnish the above details. The AO thus came to a finding that in absence of such confirmation, the identity, creditworthiness and genuineness of transactions could not be verified. Therefore, the AO made an addition of the above sum of Rs.14,60,052/- as cash credits u/s 68 of the Act.
4. Aggrieved by the order of the AO, the appellant filed an appeal before the Ld. CIT(A). During the course of appellate proceedings, the appellant vide submission dated 30.12.2010 filed the following explanation before the Ld. CIT(A):
"M/s. Kaypan Exports P. Ltd. was carrying on business as exporters of fresh fruits, vegetables etc. In the year of assessment 2005-06 the name of M/s. Kaypan Exports Pvt. Ltd. was changed to Mukund Exports Pvt. Ltd.
M/S. Kaypan Vanijya Pvt. Ltd. was also carrying on exports of fresh vegetables and fruits. In the course of business as exporter of fresh vegetables and fruits, M/s. Kaypan Vanijya Pvt. Ltd. had exported goods to M/s Kaypan Exports 3 ITA No. 2944/Mum/2014 about 9 concerns who had not paid the export price to M/s. Kaypan Vanijya Pvt. Ltd. Hereto annexed is a statement of sundry debtors of exports by M/s. Kaypan Vanijya Pvt. Ltd. As per this statement M/s. Kaypan Vanijya Pvt. Ltd. was entitled to the recovery of Rs.38,49,241/- from the 9 parties as listed in the statement.
Shri Balwantbhai Grewal, a resident of England, is a friend of the Director Shri Pankaj B. Gathani. Shri Balwantbhai Grewal is to help the appellant company in recovering the export dues of the company. In the year of account under consideration, Shri Balwantbhai Grewal had remitted a sum ofRs.14,60,052/- to India in the name of M/s, Devang Industry Inc., a division of Mukund Exports Pvt. Ltd. In the statement of fact submitted along with the appeal memo, it has been submitted that a sum of Rs.7,05,858/- is actually loan received from Balwantbhai Grewal. However, on re-checking the facts we find now that the said amount belonged to M/s. Kaypan Vanijya Pvt. Ltd. and should have been credited accordingly debtors as listed in the statement annexed hereto. However, it appears that the accountant of the appellant company, in the absence of any details regarding the remittances of Rs.14,60,052/-, credited the said amount in the name of Shri Balwantbhai Grewal as loan received and shown it in the books of M/s. Kaypan Exports Pvt. Ltd. (now known as Mukund Exports Pvt. Ltd.) instead of crediting said amount against the Sundry Debtors of M/s. Kaypan Vanijya Pvt. Ltd., the appellant states that Shri Balwantbhai Grewal is a man of means as he had already given loans of Rs.64,43,394/- in earlier years as can be seen from the loan account of Shri Balwantbhai Grewal in the books of Mukund Exports Pvt. Ltd. annexed hereto. This credit of Rs.64,43,394/- is accepted in the previous years as genuine loan being given by Shri Grewal to the appellant company.
The appellant states that the mistake in showing the amount of Rs.14,60,052/- as loan from Shri Balwantbhai Grewal should not be considered as additional loan given by Shri Balwantbhai Grewal to the M/s Kaypan Exports 4 ITA No. 2944/Mum/2014 appellant company. The addition of the said amount of Rs.14,60,052/- u/s. 68 of the Income Tax Act, 1961 is, therefore not called for. The addition may therefore, kindly be deleted."
4.1 However, the Ld. CIT(A) was not convinced with the above explanation filed by the appellant for the reason that the AO had given opportunity to the assessee to establish the genuineness of loan taken which it failed to prove. On the other hand, during the appellate proceedings, the appellant filed an explanation stating that no loan was received from Shri Balwantbhai Grewal in the concerned year; and the said amount shown as a loan in the assessee's account was actually related to the assessee's sister concerns trading account, which had been wrongly posted in the assessee's accounts as unsecured loans. Further, the Ld. CIT(A) observed from the confirmation dated 25.09.2009 filed by the appellant that Shri Balwantbhai Grewal had stated that he had forwarded Rs.14,60,052/- to the assessee in the concerned assessment year on different dates. However, the details of the said transaction i.e. the nature of it, has not been mentioned anywhere. Nowhere it has been recorded that the amount was related to the assessee's sister company. The Ld. CIT(A) also observed that it had not been stated whether the said amount represented the unsecured loan of the assessee or it was a trading receipt. No corresponding bank details were submitted to verify the said debits and credits in the account of the persons concerned. The identity of Shri Grewal also was not established. The Ld. CIT(A) further found that no proof of identification or source of income could be established. It also could not be explained as to how Shri Grewal played a role in the assessee's M/s Kaypan Exports 5 ITA No. 2944/Mum/2014 business. The original copy of accounts and correspondences could not be produced before the Ld. CIT(A). The Ld. CIT(A) also observed that if as per the statement of the appellant, the amount was wrongly credited in its books of accounts, then whether the correction had been effected to show the actual profit and loss statement in assessee's books and also in the accounts of its sister concern. As the appellant failed to file corroborative evidence, the Ld. CIT(A) confirmed the disallowance of Rs.14,60,052/- made by the AO.
5. Before us, the Ld. counsel of the appellant files an application for admission of additional evidence under Rule 29 of the ITAT Rules, 1963 (the 'Rules'). It is submitted by the Ld. counsel that the appellant could not file before the lower authorities certain documents like photocopy of VISA and passport of Mr. Balwant Singh Grewal and also the confirmation received from him on the amounts paid to the appellant. It is further stated, that the appellant did not get proper opportunity to present the same before the lower authorities and was completely relying upon its tax representative. It is further stated that these additional documents, which are sought to be filed before the Tribunal are only supplementary to the contentions already canvassed before the lower authorities. Thus it is stated that in the interest of justice and fair play, the additional evidence may be admitted to assist the Tribunal to arrive at proper, just and fair adjudication of the issue involved in the appeal.
6. On the other hand, the Ld. DR submits that the appellant had been given sufficient opportunity by the AO as well as the Ld. CIT(A) to M/s Kaypan Exports 6 ITA No. 2944/Mum/2014 establish the identity of Shri Grewal as well as his creditworthiness and genuineness of transaction. However, the appellant failed to establish the above ingredients of cash credit. Therefore, the Ld. DR submits that the application filed by the appellant for admission of additional evidence under Rule 29 be rejected and the order of the Ld. CIT(A) be confirmed.
7. We have heard the rival submissions and perused the relevant materials on record. It is well settled that in order to discharge the onus u/s 68, the assessee must prove the following:
(i) the identity of the creditor,
(ii) the capacity of the creditor to advance money; and
(iii) the genuineness of transaction.
After the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department.
We are of the considered view that the details enclosed by the appellant in its application for additional evidence under Rule 29 are relevant materials in adjudicating the contentious issue in the present case. Therefore, we admit the additional evidence filed by the assessee. However, as rightly pointed out in the decision in Smt. Urmila Ratilal v. CIT, (1982) 136 ITR 797, 799 (Guj); Hiralal Devdutt Jagadhri v. Addl. CIT, (1980) 18 CTR (Punj) 96, 98 that where an additional evidence has been allowed to be adduced, the interests of justice demand that the other side must be given an opportunity to explain or rebut such additional evidence.
M/s Kaypan Exports 7 ITA No. 2944/Mum/2014 In view of the above facts and position of law, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a de novo order, after examining that the appellant must prove (i) the identity of the creditor, (ii) the capacity of the creditor to advance money and (iii) the genuineness of the transaction. We direct the appellant to file before the AO the relevant documents/evidence. Needless to say, the AO would give reasonable opportunity of being heard to the appellant before finalising the order.
8. In the result, the appeal is allowed for statistical purposes.
Order pronounced in the open Court on 19/09/2018.
Sd/- Sd/-
(SANDEEP GOSAIN) (N.K. PRADHAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 19/09/2018
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A)-
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
BY ORDER,
//True Copy//
(Sr. Private Secretary)
ITAT, Mumbai