Indian Kanoon - Search engine for Indian Law

Income Tax Appellate Tribunal - Mumbai

Asst Cir 32(3), Mumbai vs Vinay Jayantilal Shah, Mumbai on 11 December, 2018

1 ITA No.3875/Mum/2016 Vinay Jayantilal Shah AY: 2012-13 आयकर अपीलीय अिधकरण "एच" ायपीठ मुंबई म ।

IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI माननीय ी पवन िसं ह , ाियक सद एवं माननीय ी मनोज कुमार अ वाल, ले खा सद के सम ।

BEFORE HON'BLE SHRI PAWAN SINGH, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./I.T.A. No.3875/Mum/2016 (िनधा रणवष / Assessment Year: 2012-13) Assistant Commissioner of Shri Vinay Jayantilal Shah Income Tax-32(3) A/23, Krishna Kutir बनाम/ 5 Floor, Factory Lane st th R.No.108, 1 Floor, Bdg. No. C-11 Prat yakshkar Bhavan Vs. Opp. M.K. Road Bandr a Kur la Complex Borivali (W ) Bandr a (East), Mumbai- 400 051. Mumbai-400 092 थायीले खासं . /जीआइआरसं . /PAN/GIR No. AAFPS-6736-A (अपीलाथ /Appellant) : (!"थ / Respondent) Assessee by : Divyesh I Shah- Ld.AR Revenue by : B. Srinivas-Ld. CIT-DR सुनवाई की तारीख/ : 12/11/2018 Date of Hearing घोषणा की तारीख / : 11/12/2018 Date of Pronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)

1. Aforesaid appeal by revenue for Assessment Year [AY] 2012-13 contest the order of Ld. Commissioner of Income Tax (Appeals)-44, Mumbai [CIT(A)], Appeal No.CIT(A)-44/ACIT-32(3)/ITA-316/15-16 dated 31/03/2016 on following Grounds of appeal: -

1. On the facts and in the circumstances of the case and in law, the Id.CIT(A) erred in deleting the addition made u/s. 68 of Rs.17,32,47,702/- by the AO without considering the fact that the assessee has failed to discharge the 2 ITA No.3875/Mum/2016 Vinay Jayantilal Shah AY: 2012-13 onus of proving the genuineness of the will of Late Mr. Prakash Chandra Shah. The Ld. CIT (A) also erred in holding that the copy of the will of Shri Prakash Chandra Shah dated 05.07.2011 was copy of a genuine will despite the fact that the AO has brought on record a number of defects therein.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in holding that the assessee's claim of Business Loss of Rs.4,00,25,218/- was allowable despite the fact that the assessee has not suffered a loss from share transactions and the assessee has claimed loss due to valuation of shares received through Will of Shri Prakash Chandra Shah.

The assessee being resident individual was assessed for impugned AY in scrutiny assessment u/s 143(3) on 31/03/2015 by Ld. Assistant Commissioner of Income Tax-32(3), Mumbai [AO] wherein the income of the assessee was assessed at Rs.17.33 Crores after sole addition of Rs.17.32 Crore u/s 68 as against Nil return filed by the assessee on 13/09/2012. The business loss of Rs.4 Crores claimed by the assessee was also not allowed to be set-off and carried forward for the reasons stated in the quantum assessment order.

2.1 During assessment proceedings, upon perusal of financial statements, it transpired that the assessee introduced capital of Rs.17.32 crores in his books of account and accordingly, the assessee was asked to explain the source of the same. The assessee claimed that his brother Mr. Prakashchandra Shah [Mr. Shah] had expired and the entire property belonging to his brother was bequeathed to him under a Will which was introduced in the books of account. 2.2 In support, the assessee submitted a copy of the purported last will and testament of Mr. Prakashchandra Shah dated 05/07/2011, the perusal of which revealed that the assessee was stated to be his best friend and as per the will, 66% of the property was to be bequeathed to 3 ITA No.3875/Mum/2016 Vinay Jayantilal Shah AY: 2012-13 the assessee whereas balance 34% of the property was to be used for good cause. It was noted that Mr. Shah was a person of Indian origin but had acquired citizenship of Tanzania and hold residential VISA for India for a period of 15 years. As per the Will, there was separate will for all the properties held by Mr. Shah in Tanzania which have been bequeathed in favour of Mr. Shah's family consisting of his wife Smt. Varsha Prakashchandra Shah, Akash [son] & Amisha [daughter]. The executor of the purported last will was Mr. Chandrakant M. Shah and the witnesses were Mr. Jitendra D.Shah & Arvind M. Joshi. 2.3 The further perusal of the will revealed that it did not contain the details of the properties of the deceased and even the assessee failed to provide the said details. It was explained that the assessee was a joint holder and nominee of various investments, banks accounts, mutual funds etc. of the deceased and entire properties of the deceased were introduced in his books of account as against 66% mentioned in the purported last will, which could not be explained by the assessee. Accordingly, the assessee was asked to produce the witnesses, the executors, notary and also furnish the will pertaining to his assets situated in Tanzania. The two witnesses attended the proceedings and their statements were recorded on 09/03/2015, the relevant portion of which has already been extracted in the quantum assessment order. The perusal of statements led the Ld. AO to conclude that the witnesses had no knowledge about properties or financial standing of the deceased and also did not have knowledge about assessee or his business affairs. The executor did not attend the proceedings and the so-called will for assets situated in Tanzania could also not be produced by the assessee.

Vinay Jayantilal Shah AY: 2012-13 2.4 Subsequently, the assessee submitted that a letter dated 03/03/2015 has been received from the wife of the deceased in which she claimed that she was in possession of another will dated 02/08/2011 executed by the deceased and she and her son were the major beneficiaries of the estate of the deceased. She also sought probate for the estate of the deceased and the assessee was instructed to transfer all the benefits received by him under the will. The assessee offered to revert back the capital introduced in his books to the wife of the deceased in future.

2.5 The entire gamut of factual matrix, events, & other documentary evidences led the Ld. AO to believe the purported last will dated 05/07/2011 was fake and non-genuine and the assessee attempted to defraud the revenue by introducing his own unaccounted income in his books of accounts through a fake will. Finally, the amount of Rs.17.32 Crores introduced by the assessee in the books was treated as unexplained cash credit u/s 68. Without prejudice, it was also concluded that the aforesaid amount was liable to be added in the hands of the assessee under the provisions of Section 56(2)(vii). The Ld. AO also held that loss of Rs.4 Crores claimed by the assessee was not allowable since the shares were held as investments and transferred to the assessee from the books of the deceased and neither there was opening stock and nor were these shares purchased.

3. Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 31/03/2016 wherein Ld. CIT(A) drew certain conclusions which are given on pages 25 to 39 of the impugned order. The brief crux of the same is that Ld. CIT(A) concluded 5 ITA No.3875/Mum/2016 Vinay Jayantilal Shah AY: 2012-13 that original will was produced by the assessee & it was genuine. It was further concluded that adverse view could not be drawn due to non- appearance of the executor or the notary. A conclusion was also drawn that since the credit of amount stood explained by the stated will, addition u/s 68 were not called for. Finally, Ld. CIT(A) treating the will dated 05/07/2011 as valid will and making several other observations concluded that the additions u/s 68 could not be sustained and since the properties were received under will, the provisions of Section 56(2)(vii) had no applicability. The matter of carry forward of business loss was set aside for re-adjudication. Aggrieved, the revenue is in further appeal before us.

4. The Ld. Authorized Representative for Assessee [AR], Shri Divyesh I.Shah, at the outset, sought admission of additional evidences under Rule-29 on the ground that the same could not be submitted at the time of assessment proceedings as well as under appellate proceedings. The additional evidences are in the shape of probate of will dated 02/08/2011 stated to be executed by the deceased, as obtained by the wife of the deceased from Hon'ble Bombay High Court on 29/04/2016. It has been submitted that in terms of the probate, the asset and properties were to be bequeathed to the wife and the son of the deceased and the assessee has subsequently returned the assets to the wife in accordance with the will dated 02/08/2011. The copies of the probate and other documentary evidences, in this regard, has been placed in the paper-book. It has been submitted that the aforesaid documents demonstrate the transfer of assets from the assessee to the wife and were imperative in deciding the issue and goes to the root of the matter.

Vinay Jayantilal Shah AY: 2012-13 Per Contra, Ld. CIT-DR, Shri B.Srinivas, submitted that the complete onus to prove the factual matrix was on assessee.

5. Upon perusal of material on record, it appears that the wife of the assessee has obtained probate of will of the deceased from Hon'ble Bombay High Court subsequent to the conclusion of appellate proceedings. This probate has material bearing on the issue under hand and germane to adjudicate the dispute before us. Therefore, without delving much deeper into the issue, the impugned order is set-aside. The matter stand remitted back to the file of Ld. AO for re-adjudication in terms of additional evidences as well as other documentary evidences submitted by the assessee, who in turn, is directed to substantiate his stand and explain the credit taken by him in his books of accounts. Needless to add that reasonable opportunity of being heard shall be granted to the assessee.

6. The appeal of the revenue stands allowed for statistical purposes.

Order pronounced in the open court on 11th December, 2018.

           Sd/-                         Sd/-
      (Pawan Singh)            (Manoj Kumar Aggarwal)

ाियक सद / Judicial Member लेखा सद / Accountant Member मुंबई Mumbai; िदनां क Dated : 11/12/2018 Sr.PS, Jaisy Varghese 7 ITA No.3875/Mum/2016 Vinay Jayantilal Shah AY: 2012-13 आदे शकी"ितिलिपअ$ेिषत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. !"थ / The Respondent

3. आयकरआयु)(अपील) / The CIT(A)

4. आयकरआयु)/ CIT- concerned

5. िवभागीय!ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai

6. गाड. फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.