Shri Rameshbhai G. Gajera, JUNAGADH V. The Income Tax Officer, Ward-1(3), Veraval

CO 13/RJT/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7738 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREM PRAKASH
• Assessee Lawyers: K T HEMANI
• Keywords: Unexplained cash credit
• Section: 43(5)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI A. K.GARODIA, AM ITA NOS.315/RJT/2012. / ASSESSMENT YEARS 2008-09 INCOME-TAX OFFICER, WARD 1 (3), VERAVAL. ( / APPELLANT) VS. LATE SHRI GORDHANBHAI PANCHABHAI GANGERA, AT SURVA GIR, TAL. TALAL. LR SHRI RAMESHBHAI G GAJERA, SHRINATH NAGAR, ST.NO.1. BEHIND ST STAND, GIRIRAJ MAIN ROAD, JUNAGADH. PAN:AIJFPG4069B / RESPONDENT CO NO.13/RJT/12 IN ITA NOS.315 /RJT/2012. / ASSESSMENT YEARS 2008-09 LATE SHRI GORDHANBHAI PANCHABHAI GANGERA, . ( /CROSS - OBJECTOR ) VS. INCOME-TAX OFFICER, WARD 1 (3), VERAVAL. / RESPONDENT / REVENUE BY SHRI PREM PRAKASH ' / ASSESSEE BY SHRI K.T.HEMANI & / DATE OF HEARING 1.8.2012 & / DATE OF PRONOUNCEMENT 3.8.2012 / / / / ORDER PER T. K. SHARMA, JM THIS APPEAL OF THE REVENUE AND CROSS-OBJECTION BY THE ASSESSEE ARE AGAINST THE ORDER OF THE LD. CIT(A)-RAJKOT, DATE D 24.2.2012 FOR THE ASSESSMENT YEAR 2008-09. SINCE APPEAL OF THE REVENUE AN D CROSS- ITA NOS.315 /RJT/2012. CO NO.13RJT/12 2 OBJECTION BY THE ASSESSEE WERE HEARD TOGETHER WE PROCE EDS TO DECIDE THE SAME BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENC E. 2. THE GROUNDS TAKEN BY THE REVENUE ARE REPRODUCED BELOW : 1. THE LD. CIT (A)-, RAJKOT HAS ERRED IN LAW AND O N FACT IN DELETING THE ADDITION OF RS.72,36,025/- MADE BY TH E AO U/S 69A OF THE ACT, 1961 BEING THE UNEXPLAINED CREDITS REFLECTED IN BANK ACCOUNT, WITHOUT APPRECIATING THE FACTS BROUGH T ON RECORD. 2. THE LD. CIT (A)- , RAJKOT HAS ERRED IN LAW AND O N FACT IN DIRECTING THE AO TO ALLOW SET OFF OF LOSS OF RS.9 ,28,901/- AGAINST THE INCOME UNDER OTHER HEADS, WITHOUT APPR ECIATING THE FACTS BROUGHT ON RECORD BY THE AO. 3. ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A ) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. ANY OTHER GROUND THAT THE REVENUE MAY RAISE BE FORE OR DURING HEARING PROCEEDINGS BEFORE THE HONBLE ITAT 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT (A)-IV RAJKOT MAY KINDLY BE SET ASIDE AND THAT OF THE ASSE SSING OFFICER BE RESTORED. 3. BRIEF FACTS RELATING TO CONTROVERSY RAISED IN GROUN D NO.1 ARE THAT THE AO IN THE ASSESSMENT ORDER MADE ADDITION OF RS.72, 36,025/- IN RESPECT OF THE CREDIT APPEARING IN THE SAVING BANK ACCOUN T NO.252010100043412 WITH AXIS BANK, JUNAGAD JOINT LY HELD WITH HIS WIFE. 4. ON APPEAL, BEFORE THE LD. CIT(A), THE ASSESSEE CONTE NDED THAT THE SAID ACCOUNT BELONG TO HIS WIFE SMT.VALIBEN G GAJ ERA AND ALSO EXPLAINED EACH DEPOSIT AND WITHDRAWAL IN THE SAID BANK ACCOUNT MADE BY HER. AFTER CALLING THE REMAND REPORT, THE LD. C IT(A DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN PARAGRAPH 6 OF HIS ORD ER WHICH IS REPRODUCED BELOW:. 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSION S OF APPELLANT AND ASSESSING OFFICER. I FIND THAT AFFIDAVIT OF SMT VALIBEN G.GAJERA OWNING UP THE SAVING ACCOUNT NO. 25201010004 3412 WITH ITA NOS.315 /RJT/2012. CO NO.13RJT/12 3 AXIS BANK AND EXPLAINING EACH DEPOSIT AND WITHDRAWAL I N THIS BANK ACCOUNT HAS NOT BEEN QUESTIONED BY THE AO WHILE SUBMITT ING THE REMAND REPORT IN CASE OF APPELLANT. SMT VALIBEN G. GAJERA HAD SUBMITTED HER FINANCIAL ACCOUNTS ALSO. THE SOURCE OF HER ASSETS IN HER BALANCE SHEET IS MAINLY SHOWN AS HER HUGE CAPITAL CARRIED OVER FROM EARLIER YEAR. SHE STATED THAT SHE IS HAVING AGRICU LTURAL INCOME FROM AGRICULTURAL LAND ALLOTTED TO HERE IN THE FAMI LY SETTLEMENT AND SHE RETAINED CASH GENERATED FROM THE SALE PROCEEDS OF T HE AGRICULTURAL PRODUCE WITH HERSELF AND ALSO WITH HER SON . SHE STATED THAT SHE .HAD SEPARATE SOURCES OF EARNING THE AGRICULTU RAL INCOME AND FROM THE DEALING OF SHARES AND SECURITIES. THE CAPIT AL OF ABOUT RS 44.45 LAKH AS ON 01-04-2007 IN HER BALANCE SHEET TO EXPLAIN HER INVESTMENTS IN VARIOUS AGRICULTURE RELATED INVESTMENTS AN D SHARES MAY BE SUBJECT TO ENQUIRY AND FURTHER ASSESSMENT IF IT I S FOUND THAT IT REPRESENTS HER INCOME OF ANY SPECIFIC ASSESSMENT YEAR WHICH IS TAXABLE OR UNEXPLAINED. HOWEVER, IT IS QUITE OBVIOUS FROM THE RE PORT OF ASSESSING OFFICER AND SUBMISSION OF APPELLANT THAT THE ASSESSMENT IN RESPECT OF THE DEPOSITS IN THE SAVING ACCOUN T NO. 252010100043412 WITH AXIS BANK WAS MADE IN THE HANDS O F APPELLANT BECAUSE AXIS BANK HAD FORWARDED THE INFORMAT ION IN AIR IN THE NAME OF SECOND HOLDER OF THIS ACCOUNT, I.E APPE LLANT AND NOT THE FIRST HOLDER OF THE ACCOUNT, I.E, SMT VALIBEN G. G AJERA GENERALLY IT IS THE FIRST HOLDER OF ANY ACCOUNT OR INVESTMENT WHO IS CONSIDERED THE OWNER. MOREOVER, SMT VALIBEN G. GAJERA HAS CONFI RMED IN HER AFFIDAVIT THAT SHE IS THE OWNER OF THIS ACCOUNT AND HAS GIVEN EXPLANATION OF EACH DEPOSIT AND WITHDRAWAL IN THIS BA NK ACCOUNT AS THE OWNER OF ANY ACCOUNT WOULD GIVE. THEREFORE I FIND THAT THE ASSESSMENT OF TAXABLE INCOME, IF ANY, EMANATING FROM THE DEPOSITS IN THE BANK ACCOUNT NO. 252010100043412 WITH AXIS BANK SH OULD HAVE BEEN MADE IN THE HANDS OF SMT VALIBEN G. GAJER A ASSESSING OFFICER MAY PASS ON THE INFORMATION GIVEN BY SMT VAL IBEN G. GAJERA IN HER AFFIDAVIT TO THE ASSESSINGOFFICER OF SMT VALIBEN G. GAJERA IN FACT WHEN APPELLANT HAD APPRISED THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDING THAT THE ACCOUNT PERTAINS TO SMT VALI BEN G. GAJERA, HE COULD HAVE PASSED ON THE INFORMATION TO TH E ASSESSING OFFICER OF SMT VALIBEN G. GAJERA AT THAT TIME ITSELF IN ANY CASE, I FIND THAT IN VIEW OF AFFIDAVIT OF SMT VALIBEN G.GAJERA O WNING UP THE ACCOUNT NO. 252010100043412 WITH AXIS BANK AND HER EXPL ANATION IN RESPECT OF EACH DEPOSIT AND WITHDRAWAL IN THIS BANK ACCO UNT IT WOULD NOT BE APPROPRIATE TO TAX APPELLANT ON THE BA SIS OF THIS BANK ACCOUNT WHICH ACTUALLY PERTAINS TO SMT VALIBEN G. GAJERA I THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDI TION OF RS,72,36,025/- MADE BY HIM TO THE TOTAL INCOME OF APPELLANT AND PASS ON THE RELEVANT INFORMATION TO THE ASSESSING OFFICER OF SMT VALIBEN G. GAJERA. 5. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) DELE TING THE ADDITION OF RS.72,36,025/-, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NOS.315 /RJT/2012. CO NO.13RJT/12 4 6. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE TH ROUGH THE ORDERS OF AUTHORITIES BELOW. THE ONLY GRIEVANCE OF T HE REVENUE IS THAT THE SAVING BANK ACCOUNT IN QUESTION WAS IN THE JOINT N AME OF THE ASSESSEE AND HIS WIFE SMT.VALIBEN G GAJERA, THEREFORE, THE AO HAS RIGHTLY MADE THE ADDITION. AS AGAINST THIS, THE LD. C OUNSEL FOR THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT( A). FROM THE PERUSAL OF THE REASONINGS GIVEN BY THE LD.CIT(A) IN PA RAGRAPH 6 OF HIS ORDER WHICH IS REPRODUCED BY US HEREINABOVE. IT IS CLE AR FROM THE AFORESAID FINDING OF THE LD. CIT(A) THAT THE WIFE OF THE ASSESSEE IS OWNING THE SAID BANK ACCOUNT AND ALSO EXPLAINED EACH AND EVERY DEPOSITS AND WITHDRAWALS. THE SOURCES OF DEPOSITS IN THE SAID ACCOUN T ARE FROM INCOME OF THE ASSESSEES WIFE ALONE. WE ARE, THEREFORE, OF THE VIEW THAT THE LD. CIT(A IS LEGALLY AND FACTUALLY CORRECT IN DELET ING THE ADDITION OF RS.72,36,025/- . WE, THEREFORE, DECLINE TO INTERFER E IN THE ORDER OF THE LD. CITA). 7. THE GROUND NO.1 TAKEN BY THE REVENUE IS THEREFORE DISMISSED. 8. THE FACTS RELATING TO THE GROUND NO.2 ARE THAT IN THE ASSESSMENT ORDER THE AO IGNORED THE LOSS AMOUNTING TO RS.9,28,9 01/- ON THE GROUND THAT IT IS A LOSS FROM SPECULATIVE BUSINESS. ON APPEAL, B EFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT IN TERMS OF SECTION 43(5)(D), THE LOSS IN QUESTION IS NON SPECULATIVE AND IS ELIGIBLE FOR SE TTING OFF U/S 71 OF THE ACT WHILE DETERMINING THE TOTAL INCOME. AGGRIEVED WITH THIS DIRECTION OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT AS PER T HE AMENDMENT IN SECTION 43(5) WITH EFFECT FROM THE ASSESSMENT YEAR 20 06-07, THE LOSS IN ITA NOS.315 /RJT/2012. CO NO.13RJT/12 5 DERIVATIVE TRANSACTIONS IS ALLOWABLE AS THE SAID TRANSA CTION IS NOT COVERED BY THE PROVISIONS OF SECTION 43(5) OF INCOME TAX ACT AS S PECULATIVE TRANSACTION. UNDER THESE CIRCUMSTANCES, THE LD. CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN DIRECTING THE AO TO ALLOW THE SE T OFF OF LOSS OF RS.9,28,901/- AGAINST THE INCOME FROM OTHER SOURCES FOR THE ASSESSMENT YEAR UNDER APPEAL. THIS GROUND OF APPEAL OF THE R EVENUE IS REJECTED. CO NO.13/RJT/12 10. CROSS-OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A). IN VIEW OF OUR DECISION IN REVENUES APPEAL, THE CROSS- OBJECTION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND HENC E DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS-OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD/- SD/- ( A. K.GARODIA) ( T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER +/ ORDER DATE 03-08-2012. /RAJKOT SRL - - - - .- .- .- .- / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-, 2. / RESPONDENT- 3. 4 / CONCERNED CIT. 4. 4- / CIT (A). 5. - , , / DR, ITAT, RAJKOT ITA NOS.315 /RJT/2012. CO NO.13RJT/12 6 6. / GUARD FILE. / BY ORDER , SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.