M/s M.A. Textiles Pvt. Ltd., 28, Ramesh Bhavan, 89, Tamba Katta, Paydhuni, Mumbao 400 003. Vs. Income Tax Officer 6(3)(3), Mumbai.
October, 27th 2014
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI
BEFORE SHRI N.K. BILLAIYA, AM AND SHRI VIVEK VARMA, JM
./I.T.A. No.6752/ Mum/2008
( / Assessment Year : 2000-01
M/s M.A. Textiles Pvt. / Income Tax Officer
28, Ramesh Bhavan, Mumbai.
89, Tamba Katta,
Mumbao 400 003.
. / PAN : AAACM9949H
( /Appellant) .. ( / Respondent)
Appellant by Shri Rajiv Khandelwal
Department by Shri Love Kumar
/ Date of Hearing : 16-10-2014
/Date of Pronouncement : 20-10-2014
/ O R D E R
PER N.K. BILLAIYA, A.M. :
. . ,
This appeal by the assessee is preferred against the order of ld. CIT(A)
VO, Mumbai dated 23-09-2008 pertaining to the A.Y. 2000-01.
2. The assessee has raised three substantive grounds of appeal.
3. At the outset, the ld. Counsel for the assessee stated that he is not
pressing ground No. 1 & 2. Ground No. 1 & 2 are accordingly dismissed as
2 ITA 6752/M/08
4. The only surviving ground relates to the addition of Rs. 18,74,029 made
by the A.O. on account of alleged unexplained expenditure u/s 69-C of the
Income Tax Act, 1961.
5. The return for the year was filed on 30-11-2000 declaring income of Rs.
15,870/-. The A.O. received intimation from Asstt. Director of Investigation
II, Udaipur. As per the intimation, a search and seizure 0peration was carried
out at the residence of Shri Mahesh Agarwal who happens to be a Director of
M/s Bhartiya Spinners Ltd., Ganeshpura, Rajasthan. In addition, Shri
Mahesh Agarwal is also engaged in trading of yarn. It was further mentioned
that during the course of search and seizure operation, certain documentary
evidences were found and seized. One of the loose papers show that interest
of Rs. 18,74,029/- was earned during the year by Shri Mahesh Agarwal from
M/s Shree Ram Textiles, which is a branch of the assessee. According to the
Revenue Authorities, the same was not reflected in the books of the assessee.
The A.O. proposed to make the addition u/s 69-C of the Act as unexplained
expenditure. The assessee was asked to explain the same. The assessee
explained that the loose paper has not been found from the office of the
assessee. The Director from whose residence the said loose paper was found
is Director and shareholder in other company also, therefore, it cannot be
assumed that the paper reflect the account of the Director in the books of the
assessee. It was further contended that no reason has been given for treating
the said paper as belonging to the assessee. Further there is no evidence to
prove that the assessee has actually paid the amount. This explanation of the
assessee did not find favour with the A.O. The A.O. was of the opinion that
the Director from whose residence the loose paper is found is also Director of
the assessee. The A.O. further observed that it is upto the assessee to prove
whether this was not the account of Shri Mahesh Agarwal and whether any
evidence could be furnished to show that the actual payment from the
assessee was brought on record or not. The A.O. proceeded by treating Rs.
3 ITA 6752/M/08
18,74,029/- as unexplained expenditure u/s 69-C of the Act. The assessee
carried the matter before the ld. CIT(A) but without any success. Aggrieved by
this, the assessee is before us.
6. Before us, the ld. Counsel for the assessee took us through the loose
paper exhibited at page 1 of the paper book. It is the say of the ld. Counsel for
the assessee that nowhere in the loose paper it can be assumed that the
assessee has actually paid interest to Shri Mahesh Agarwal. Further, there is
no evidence on record to show that Shri Mahesh Agarwal actually received
interest from the assessee. The ld. Counsel for the assessee strongly
submitted that provisions of section 69-C of the Act are not at all applicable
on the facts of the case.
7. Per contra, the ld. D.R. strongly supported the findings of the Revenue
8. Having heard the rival submissions, we have carefully perused the
orders of the authorities below and the relevant documentary evidence
brought on record before us. The addition has been made u/s 69-C of the Act
which read as under:-
"Where in any financial year an assessee has incurred any expenditure
and he offers no explanation about the source of such expenditure or
part thereof, or the explanation, if any, offered by him is not, in the
opinion of the [Assessing] Officer, satisfactory, the amount covered by
such expenditure or part thereof, as the case may be, may be deemed
to be the income of the assessee for such financial year."
9. A perusal of the loose sheet on page 1 of the paper book does not show
whether Shri Mahesh Agarwal has received interest or he has paid interest.
Merely mention of certain figure with a prefix "Int" would not conclusively
prove that Shri Mahesh Agarwal has received interest from the assessee. It
can be other way round also. There is no corroborative evidence on record to
prove that the assessee has actually paid interest which is the sine qua non
4 ITA 6752/M/08
for the applicability of section 69-C of the Act. The burden of proof is on the
Revenue to prove the assessee has incurred any expenditure during the year
under consideration. In the case in hand, the Revenue has failed to discharge
this burden of proof. The order of the authorities below, nowhere mentioned
that Shri Mahesh Agarwal has accepted of having received any interest from
the assessee. The entire addition has been made solely on the basis of
presumption and surmises. In our understanding of law, addition made on
the basis of conjunctions and surmises cannot be sustained. We, therefore,
set aside the findings of the ld. CIT(A) and direct the A.O. to delete the
addition of Rs. 1874,029/-.
10. In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 20th October, 2014.
(VIVEK VARMA) (N.K. BILLAIYA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated - 20-10-2014.
. ../ R.K., Sr. PS
..0 /Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT)A)VI, Mumbai
4. / CIT City -6, Mumbai
5. , , / DR, ITAT, Mumbai B Bench
6. / Guard file.
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai