Shri Kanjibhai Bhagwanbhai Tandel, Nani Daman V. The ACIT, Vapi Circle, Vapi

CO 9/AHD/2014

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4217 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice; Additional evidence; Assessment record; TDS
• Section: 143(3); 69A; 64; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM, & SHRI MANISH BORAD , AM. ITA NO.2127/AHD/2013 ALONG WITH C.O. NO.9/AHD/2014 ASST. YEAR: 2005-06 ACIT, VAPI CIRCLE, VAPI. VS. SHRI KANJIBHAI BHAGWANBHAI TANDEL, VIVEK APPARTMENT, 4 TH FLOOR, NEAR JETTY MAIN ROAD, DAMAN. APPELLANT RESPONDENT PAN ABOPT 1250Q APPELLANT BY SHRI PRASOON KABRA, SR. DR RESPONDENT BY SHRI K. GOPAL, AR DATE OF HEARING: 11/7/2016 DATE OF PRONOUNCEMENT: 11/8/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE FOR ASST. YEAR 2005-06 ARE DIRECTED AGAINS T THE ORDER OF LD. CIT(A), VALSAD, DATED 7.6.2013 IN APPEAL NO.CIT(A) /VLS/25/13-14 PASSED AGAINST ORDER U/S 143(3) R.W.S. 147 OF THE I T ACT, 1961 (IN SHORT THE ACT) FRAMED ON 31.3.2013 BY ACIT, VAPI CI RCLE, VAPI. 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM ASSESSMENT RECORDS ARE THAT ASSESSEE IS AN INDIVIDUAL. RETURN OF INCOME WAS FILED ON 24.10.2005 FOR ASST. YEAR 2005-06 DECLARING TOTA L INCOME AT ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 2 RS.1,21,36,430/-. ON THE BASIS OF AIR INFORMATION C ASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE ACT AFTER ISSU ING NOTICE U/S 148 OF THE ACT DATED 31/3/2012 WHICH WAS DULY SERVE D ON THE ASSESSEE. AS PER THE AIR INFORMATION AVAILABLE WITH THE LD. ASSESSING OFFICER, IT WAS OBSERVED THAT THE ASSESSEE HAS INVE STED RS.1,46,00,000/- IN THE RESERVE BANK OF INDIA (RBI) BONDS WHEREAS AS PER ASSESSEES SUBMISSIONS INVESTMENT DURING THE YEAR IN RBI BONDS WAS OF RS.73 LACS. DURING THE COURSE OF ASSES SMENT PROCEEDINGS REQUEST WAS MADE ON VARIOUS OCCASIONS B Y ASSESSEE TO GET THE COPY OF THE AIR INFORMATION SHEET BUT THE S AME WAS NOT PROVIDED AND AS A RESULT ADDITION U/S 69A OF THE AC T FOR UNEXPLAINED INVESTMENT IN RBI BONDS OF RS.73 LACS WAS MADE. ALS O IT WAS OBSERVED THAT A CASH SUM OF RS.76,49,556/- WAS DEPO SITED IN VARIOUS BANKS ACCOUNTS DURING THE YEAR BUT IN LACK OF SUFFI CIENT DETAILS BEING FURNISHED BY ASSESSEE, ADDITION OF RS.76,49,556/- U/S 69A FOR UNEXPLAINED MONEY WAS MADE. IN TOTAL AFTER MAKING A DDITION OF RS.1,49,49,856/-, INCOME WAS ASSESSED AT RS.2,70,8 6,010/-. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL AGAINST THESE TWO ADDITIONS ALONG WITH QUESTIONING THE VALIDITY OF R E-ASSESSMENT U/S 147 OF THE ACT. HOWEVER, LD. CIT(A) HELD THAT REOPE NING OF ASSESSMENT U/S 147 WAS VALID AS THE ISSUES WHICH NE EDED EXAMINATION AND VERIFICATION WERE NEVER EXAMINED EA RLIER AND THE ADDITION U/S 69A OF THE ACT AT RS.73 LACS AND U/S 68A OF THE ACT AT RS.76,49,586/- WERE DELETED BY HIM. ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 3 4. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL AGAINST THE DELETION OF ADDITIONS BY LD. CIT(A) AND ASSESSEE HAS RAISED CROSS OBJECTION AGAINST THE ORDER OF LD. CIT (A) FOR FAILING IN DISPOSING GROUND CHALLENGING THE VALIDITY OF REOPE NING PROCEEDINGS U/S 147 OF THE ACT. 5. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.2127 /AHD/2013. GROUND NO.1 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINE D INVESTMENT AMOUNTING IN RBI BONDS AMOUNTING TO RS.73,00,000/- WITHOUT CONSIDERI NG THAT THE OF THE AMOUNT DETECTED IN THE AIR INFORMATION HAS NOT BEEN FULLY REFLECTED IN THE BALANCE SHEET. 6. LD. DR WITHOUT PLACING ANY NEW SUBMISSIONS JUST RELIED ON THE ORDER OF ASSESSING OFFICER. 7, ON THE OTHER LD. AR SUBMITTED THAT AS PER AIR IN FORMATION AVAILABLE WITH ASSESSING OFFICER IT WAS PUT TO QUES TION TO THE ASSESSEE THAT RS.1,46,00,000/- HAS BEEN INVESTED IN RBI BONDS DURING THE YEAR. THE SAME WAS STRONGLY OBJECTED BY ASSESSEE AS THE TOTAL AMOUNT OF INVESTMENT DURING THE YEAR WAS RS.7 3 LACS AND TIME AND AGAIN REQUEST WAS MADE TO THE ASSESSING OFFICER FOR PROVIDING DETAILS OF THE INVESTMENTS MADE BY ASSESSEE IN RBI BONDS WITH REGARD TO THE DATE OF INVESTMENT, AMOUNT OF INVESTM ENTS AND THE BANK FROM WHICH SO CALLED INVESTMENT HAS BEEN REFLECTED IN THE AIR REPORT BUT COULD NOT SUCCEED. THEREAFTER ASSESSEE MADE APP LICATIONS UNDER RTI ACT FOR GETTING THE DETAILS OF INVESTMENTS IN T HE NAME OF ASSESSEE FOR RBI BONDS DURING THE YEAR AND THE REPLY RECEIVE D FROM 3I INFOTECH ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 4 ON BEHALF OF LTD., ICICI BANK AND STOCK HOLDING CO RPORATION MATCHED THE INFORMATION SHOWN BY THE ASSESSEE IN THE BALANC E SHEET FILED WITH HIS RETURN OF INCOME. THEREFORE, LD. CIT(A) HAS RIG HTLY DELETED THE ADDITION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS GROUND REVENUE IS AGGRIEVED WITH THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION U/S 69A FOR UNEXPLAINED INVESTMENT OF RS.73 LACS IN RBI BONDS. WE OBSERVE T HAT ASSESSEE HAS SHOWN AN INVESTMENT OF RS.73 LACS DURING THE YE AR IN RBI BONDS IN HIS INDIVIDUAL NAME. AIR INFORMATION ON THE BASI S OF WHICH LD. ASSESSING OFFICER HAS EMBARKED UPON THE ASSESSEE AL LEGING TO MAKE INVESTMENT OF RS.1.46 CRORES WAS NEVER MADE AVAILAB LE TO THE ASSESSEE. WE FIND THAT NECESSARY DETAILS WERE FILED BEFORE BOTH THE LOWER AUTHORITIES BY THE ASSESSEE ALONG WITH THE IN FORMATION RECEIVED UNDER RTI ACT FROM ICICI BANK AND STOCK HOLDING COR PORATION ON THE BASIS OF WHICH LD. CIT(A) DELETED THE ADDITION BY O BSERVING AS UNDER :- 6.3.1 FIRST, WITH REGARDS TO THE ADDITION OF RS. 73,00,OOO/- INVESTMENTS MADE IN RBI BONDS. THE ID. AR SUBMITTED THE RECONCILIATION OF I NVESTMENTS IN GOVT. BONDS MADE BY THE APPELLANT DURING THE F.Y. 2004-05 GIVING DET AILS OF DATE OF INVESTMENT, AMOUNT OF INVESTMENT, DATE OF MATURITY, BOND LEDGER A/C NU MBER, RATE OF INTEREST AND THE SAVING BANK OF A/C FROM WHERE THE INVESTMENT OF RS, 73,00,000/- IS MADE. THE FOLLOWING TWO SIGNIFICANT STATEMENTS WHICH CORROBOR ATE THE CONTENTION OF THE ID. AK; STATEMENT-1 INVESTMENT IN BONDS DURING F.Y. 2004 -05 BY KANJIBHAI B. TANDEL ST. NO NAME RATE OF INTEREST DATE OF DEPOSIT DATE OF MATURITY AMOUNT NAME OF THE BANK DATE OF CHEQUE 1 MR. K. B. TANDEL TAXABLE 8% 09.08.2004 03.08,2010 1000000 BOB 03.08.2004 2 MR. K. B. TANDEL TAXABLE 8% 27,08.2004 23.08.2010 1500000 BOB 23.08.2004 ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 5 3 MR. K. B. TANDEL TAXABLE 8% 29.10.2004 20,10.2010 1000000 BOB 20.10.2004 4 MR. K. B. TANDEI TAXABLE 8% 18.11.2004 10.11.2010 1700000 SCB 18.11.2004 5 MR. K. B. TANDEL TAXABLE 8% 06.10.2004 06.10.2010 1000000 BOB 06.10.2004 6 MR. K. B. TANDEL TAXABLE 8% 10.11.2004 10.11.2010 1100000 BOB 10.11.2004 TOTAL > 7300000 * BOBBANKOFBARODA * SCB= STANDARD CHARTERED BANK STATEMENT-2 INVESTMENT IN BONDS BY THE FAMILY OF HANSABEN AND K ANJIBHAI TANDEL SR. NO. NAME RATE OF INTEREST DATE OF DEPOSIT DATE OF MATURITY AMOUNT AMOUNT SUB TOTAL 1 MRS. H. K. TANDEL TAXABLE 8% 27.08.2004 23.08.2010 1620000 0 2 MRS. H. K. TANDEL TAXABLE 8% 09.11.2004 09.11.2010 1500000 0 3 MRS. H. K. TANDEL TAXABLE 8% 20.10.2004 20.10.2010 2000000 0 4 MRS. H. K. TANDEL TAXABLE 8% 04.10.2004 04.10.2010 1700000 0 682000 5 MISS KASTURI K. TANDEL TAXABLE 6.5 % 09.06.2004 03.06.2009 1100000 0 6 MISS KASTURI K. TANDEL TAXABLE 8% 23.11.2004 23.11.2010 1000000 0 7 MISS KASTURI K. TANDEL TAXABLE 8% 10.08.2004 10.08.2010 1300000 0 3400000 8 MISS KRIRNPY K. TANDEL TAXABLE 8% 30.11.2004 25.11.2010 1500000 0 ------------ 9 MISS KRIMPY K. TANDEL TAXABLE 8% 28.10.2004 28.10.2010 1200000 0 ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 6 10 MISS KRIMPY K. TANDEL TAXABLE 8% 24.11.2004 24.11.2010 1500000 ------------ 4200000 11 MR, K.B, TANDEL TAXABLE 8% 09.08.2004 03.08.2010 0 1000000 12. MR, K.B, TANDEL TAXABLE 8% 27.08.2004 23.08.2010 0 1500000 13 MR. K. B. TANDEL TAXABLE 8% 29.10.2004 20.10.2010 0 1000000 14 MR. K. B. TANDEL TAXABLE 8% 18.11.2004 10.11.2010 0 1700000 15 MR. K. B. TANDEL TAXABLE 8% 06.10.2004 06.10.2010 0 1000000 16 MR. K. B. TANDEL TAXABLE 8% 10.11.2004 10.11.2010 0 1 100000 7300000 TOTAL > 1442000 0 7300000 21720000 AS SEEN FROM THE ABOVE RECONCILIATION STATEMENTS TH E TOTAL INVESTMENT MADE BY THE ENTIRE FAMILY OF THE APPELLANT IN GOVT. BONDS IS RS . 2,17,20,000/-DURING F.Y.2004-05. .THE ID. AR ALSO FURNISHED COPY OF PAS S BOOK OF BANK OF BARODA AND STANDARD CHARTERED BANK FROM WHERE THE INVESTMENT O F RS. 73,00,000/- WAS MADE. THE ID. AR STRONGLY ARGUED THAT APPELLANT HAD TIME AND AGAIN REQUESTED THE LD. ACIT TO PROVIDE HIM THE DETAILS OF THE INVESTMENTS MADE BY THE APPELLANT IN GOVT. BONDS WITH REGARD TO THE DATE OF INVESTMENT, AMOUNT OF INVESTMENT AND THE BANK FROM WHERE SUCH INVESTMENT WAS MADE AS REFLECT ED IN THE AIR REPORT. THE LD. ACIT NEVER SUPPLIED SUCH INFORMATION WHICH HAS BECOME BASIS FOR MAKING ADDITION OF RS.73,00,000/- AS UNEXPLAINED INVESTMEN T. THIS IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IT IS THE CARDINAL P RINCIPLE OF LAW THAT IF ANY INFORMATION IN POSSESSION OF THE STATUTORY AUTHORIT Y IS USED AGAINST THE ASSESSEE, THE SAME IS TO BE PROVIDED TO THE ASSESSEE BEFORE U SING THE SAME AGAINST HIM. THEREFORE, THE ID. AR CONTENDED THAT, AFTER THE REC EIPT OF THE ASSESSMENT ORDER, THE APPELLANT HAD MADE TWO APPLICATIONS UNDER RIGHT TO INFORMATION (RTI) ACT, TO ICICI BANK AND STOCK HOLDING CORPORATION OF INDIA L TD. WHO HAD ISSUED AND MANAGED THE GOVERNMENT OF INDIA BONDS, REQUESTING T HEM TO PROVIDE THE DETAILS OF THE INVESTMENT IN GOVT. BONDS MADE BY THE APPELLANT AND THE FAMILY MEMBERS OF THE APPELLANT DURING FY.2OO4-O5- THE COPY OF THE AP PLICATIONS ALONG WITH THE ANNEXURES THERETO MADE TO ICICI BANK AS WELL AS STO CK HOLDING CORPORATION OF INDIA LTD ARE ANNEXED HERETO AND APPEARING AT PAGE 16 TO PAGE 25 OF PAPER BOOK 2. IN RESPONSE TO THE APPELLANT'S APPLICATIONS, THEY H AD PROVIDED THE DETAILS OF THE ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 7 INVESTMENT MADE BY THE APPELLANT AND THE FAMILY OF THE APPELLANT DURING F.Y. 2004-05 IN GOVT. BONDS. THE COPY OF THE REPLIES GIV EN BY 31 INFOTECH LIMITED ON BEHALF OF ICICI BANK AS WELL AS STOCK MOLDING CORPO RATION OF INDIA LTD, ARE ANNEXED HERETO AND APPEARING AT PAGE 26 TO PAGE 42 OF PAPER BOOK 2. I HAVE EXAMINED THE REPLY TO THE RTI QUERY GIVEN BY 31 INF OTECH LIMITED ON BEHALF OF ICICI BANK AS WELL AS STOCK HOLDING CORPORATION OF INDIA LTD AND FOUND TO BE MATCHING WITH THE TABLES -STATEMENT-1 & 2 ABOVE. FU RTHER, THE APPELLANT'S BALANCE SHEET ALSO SHOWS THESE INVESTMENTS. I HAVE ALSO TAKEN NOTE OF THE REPLY TO THE RTI QUERY AND HELD THAT THEY ARE NOT ADDITIONAL EVIDENCE BUT A CORROBORATIVE EVIDENCE DUE TO THE REFUSAL OF THE AO TO SHARE THE AIR INFORMATION WITH THE APPELLANT. NATURAL JUSTICE DEMANDS THAT IF ANY STAT EMENT OR DOCUMENT IS USED AGAINST ANY ASSESSEE, SUCH STATEMENT OR DOCUMENT SH OULD BE MADE AVAILABLE FOR TO THE ACCUSED FOR HIS DEFENSE. WHAT THE ID. AR WANTED TO AUGMENT HIS ARGUMENT BY SUBMITTING THE THIRD PARTY'S DOCUMENT IS THE AIR IN FORMATION, ON THE BASIS OF WHICH SUCH HUGE ADDITION MADE, WAS IN FACT CANNOT B E RELIED ON COMPLETELY IN THE FACE OF RECORDED TRANSACTIONS. THERE IS A FORCE IN THE ARGUMENT OF THE ID. AR THAT UNLESS THERE IS CLEAR FINDING ON THE UNRECORDED TRA NSACTION/INVESTMENTS ON THE BOOKS OF THE APPELLANT, SUCH ADDITION IS NOT JUSTIF IED. I HAVE PONDERED OVER THE FACTUAL MATRIX OF THE CASE. I AM CONVINCED THAT THE ID. AR HAD RIGHTLY FURNISHED THE DETAILS OF INVESTMENT WITH ALL RELEVANT SUPPORTIVE EVIDENCES/DOCUMENTS. THE INVESTMENTS ALSO FOUND PLACE IN THE BALANCE SHEET O F THE APPELLANT. MOREOVER, THERE IS NO PALPABLE REASON FOR THE APPELLANT NOT TO SHOW THE INVESTMENTS WHICH ARE TAXABLE ON MATURITY BECAUSE AT THE TIME OF MATURITY THE RECEIPT/RETURN ON INVESTMENT WILL ATTRACT RELEVANT TDS PROVISIONS OF THE ACT. CONSIDERING THE FACTUM OF THE CASE, THE ADDITION MADE BY THE AO IS DESERVE D TO BE DELETED IN THE ABSENCE OF ANY SUBSTANTIAL MATERIAL FACTS BROUGHT ON RECORD BY THE AO FOR MAKING SUCH ADDITION. MOREOVER, THE DOCUMENTS SUBMITTED BEFORE ME OVERWHELMINGLY DEMONSTRATE THE ACTUAL INVESTMENT MADE BY THE APPEL LANT WHICH ARE DULY RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE IN TINS PART GROUND RAISED. 9. FROM GOING THROUGH THE OBSERVATION MADE BY LD. C IT(A) AS WELL AS THE FACTS NARRATED BY LD. AR OF THE ASSESSEE WE OBSERVE THAT INVESTMENTS IN BONDS MADE BY ASSESSEE THROUGH PROPE R BANKING CHANNELS, RECONCILED WITH THE INFORMATION RECEIVED FROM INDEPENDENT SOURCE UNDER RTI ACT FROM 3I INFOTECH LIMITED ON BE HALF OF ICICI BANK AS WELL AS STOCK HOLDING CORPORATION OF INDIA LTD., LEAVES NO MORE CONFUSION. WE ARE FURTHER UNABLE TO UNDERSTAND THE COPY OF AIR ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 8 INFORMATION WAS NOT SUPPLIED TO THE ASSESSEE AS IT WAS THE VERY BASIS OF REOPENING THE ASSESSMENT. IT WAS AGAINST THE PRI NCIPLE OF NATURAL JUSTICE DUE TO WHICH ASSESSEE WAS DEVOID TO GET NEC ESSARY INFORMATION WHICH IS HIS RIGHT. 10. DURING THE COURSE OF HEARING IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT INVESTMENT IN RBI BONDS CAN BE MADE ONL Y THROUGH BANKING CHANNEL AND ONE IS NOT ALLOWED TO PURCHASE RBI BONDS IN CASH AND THIS FACT WAS NOT DISPUTED BY THE REVENUE. IN SUCH SITUATION WHEN INFORMATION EMBEDDED IN THE AIR INFORMATION IS NOT DISCLOSED BY THE ASSESSING AUTHORITY RELATING TO THE NAME AND ADDRESS OF THE INVESTOR AND THE BANK ACCOUNT THROUGH WHICH INVESTM ENT HAS BEEN MADE, ASSESSEE CANNOT BE SUBJECTED TO ADDITION U/S 69A OF THE ACT. WE ARE, THEREFORE, OF THE VIEW THAT IN THE GIVEN FA CTS AND CIRCUMSTANCES, WHEN THE INVESTMENT MADE BY ASSESSEE DURING THE YEAR ARE MATCHING WITH THE INFORMATION RECEIVED FRO M ICICI BANK AND STOCK HOLDING CORPORATION UNDER RTI ACT WHICH ARE C ORROBORATIVE EVIDENCES AND ALSO IN THE GIVEN SITUATION WHEN ASSE SSEE WAS DENIED NATURAL JUSTICE BY WAY OF NOT PROVIDING DOCUMENTS U SED AGAINST HIM FOR MAKING ADDITION, WE ARE OF THE VIEW THAT LD. CI T(A) HAS RIGHTLY DELETED THE ADDITION. WE FIND NO REASON TO INTERFER E WITH THE ORDER OF LD. CIT(A) ON THIS GROUND. WE UPHOLD THE SAME. THIS GROUND OF REVENUE IS DISMISSED. 11. GROUND NO.2 - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINE D MONEY AS CASH DEPOSIT ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 9 AMOUNTING TO RS.76,49,586/- EVEN THOUGH THE CASH DE POSITED IN HIS SAVINGS BANK ACCOUNT IN WHICH HE HAD DEPOSITED CASH OF RS.76,49, 586/- WAS NOT EXPLAINED/SUPPORTIVE EVIDENCE NOT PRODUCED. 12. LD. DR SUBMITTED THAT ASSESSEE HAS FAILED TO FU RNISH THE DETAILS OF BANK ACCOUNTS AS WELL AS THE CASH DEPOSITED IN H IS FOUR BANK ACCOUNTS AND, THEREFORE, MADE ADDITION AS UNEXPLAIN ED INVESTMENT U/S 69A OF THE ACT. 13. ON THE OTHER HAND, LD. AR CONTENDED THAT NECESS ARY DETAILS WERE FILED ALONG WITH PERSONAL CASH BOOK SHOWING FL OW OF CASH DEPOSIT IN BANK ACCOUNT. ASSESSEE IS PARTNER OF M/S KRIMPI DISTILLERY, DAMAN. SOURCE OF CASH RECEIVED WAS FROM CASH WITHDR AWALS ON VARIOUS DATES FROM M/S KRIMPI DISTILLERY, DAMAN, W HICH IS PLACED ON RECORD AT PAGES 58 TO 161 OF THE PAPER BOOK. LD. AR ALSO REFERRED TO THE CASH BOOK FROM PAGE 64 TO 157 SHOWING DETAILS O F CASH DEPOSITS IN VARIOUS BANK ACCOUNTS. ON THE BASIS OF THESE DET AILS LD. AR CONFIDENTLY ARGUED THAT THE SOURCE OF CASH OF RS.76 ,49,586/- IS EXPLAINED AND LD. CIT(A) WAS JUSTIFIED IN DELETING THE IMPUGNED ADDITION U/S 68A OF THE ACT. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. REVENUE IS AGGRIEVED WITH THE DELETION O F ADDITION U/S 68A OF THE ACT FOR UNEXPLAINED MONEY I.E. CASH DEPOSITE D AT RS.76,49,586/- IN VARIOUS BANK ACCOUNTS. WE OBSERVE THAT LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER :- 6.3.2 THAT BRINGS TO THE SECOND LIMB OF THE ISSUE I.E. - WHETHER SOURCE OF CASH DEPOSITS OF RS. 76,49,586/- WAS EXPLAINED/JUSTIFIED CONSIDERING THE DOCUMENTS SUBMITTED BEFORE AO ? THE AO MADE ADDITION WITH AN OBSERVATION THAT THE ASSESSEE DID NOT SUBMIT ANY CONCRETE EVIDENCES ABOU T THE CASH DEPOSITS IN THE 4 ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 10 SAVING ACCOUNT. THE ID. AR ON THE OTHER HAND CONTEN DED THAT THE APPELLANT HAD SUBMITTED THE ENTIRE PERSONAL CASH BOOK ALONG WITH THE COPY OF THE DETAILED CAPITAL ACCOUNT WITH M/S. KRIMPI DISTILLERY, WHEREIN HE IS A PARTNER, FOR A.Y. 2005-06. THE ENTIRE CASH DEPOSITED IN THE BANK ACCOUNT IS WI THDRAWN FROM M/S. KRIMPI DISTILLERY AND DEPOSITED IN DIFFERENT BANK ACCOUNTS . HE HAD PASSED A REMARK PARAGRAPH 9 ON PAGE 6 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NEVER FURNISHED THE DETAILS OF SAVINGS BANK ACCOUNT IN WH ICH HE HAD DEPOSITED CASH DURING RELEVANT PERIOD. REFERENCE IS MADE TO PARAGR APH 5, 6 & 7 OF THE APPELLANT'S LETTER DATED 12.02.2013 WHEREIN THE APPELLANT HAS E XPLAINED THE ENTIRE INVESTMENTS AS WELL AS CASH DEPOSIT MADE BY THE APPELLANT IN BA NK ACCOUNTS. EVEN THE PERSONAL CASH BOOK WAS SUBMITTED TO THE LD. ACIT ALONG WITH THE APPELLANT SAID LETTER DATED 12.02.2013. THE APPELLANT PRODUCED COPY OF TH E PERSONAL CASH BOOK FOR MY PERUSAL. I HAVE PERUSED THE LEDGER A/C. AND CAPITAL A/C. OF THE APPELLANT WITH M/S. KRIMPI DISTILLERY. I HAVE ALSO EXAMINED THE INCOME SHOWN BY THE APPELLANT IN THE COMPUTATION OF INCOME SHEET FILED WITH THE R/I. THE OPENING BALANCE OF CAPITAL A/C. OF THE PARTNER WITH M/S. KRIMPI DISTILLERY WAS RS.1,50,32,383/- AS ON 1 ST APRIL' 2004. THERE WERE MANY WITHDRAWALS SUBSEQUENT LY DURING THE FINANCIAL YEAR. THE APPELLANT HAD ALSO RECEIVED SALARY OF RS. 1,,20 ,77,376/- AND SHARE INCOME FROM PARTNERSHIP FIRM M/S. KRIMPI DISTILLERY OF RS. 76,10,173/-. I HAVE ALSO RANDOMLY VERIFIED THE CASH WITHDRAWALS FROM THE CAP ITAL ACCOUNT AND CORRESPONDING DEPOSITS IN VARIOUS ACCOUNT AND FOUND TO BE MATCHING. THEREFORE, THE APPELLANT HAS SATISFACTORILY EXPLAINED THE SOUR CE OF FUNDS/CASH DEPOSITED IN THOSE ACCOUNT. THE AO HAS NOT IDENTIFIED IN THE ASS ESSMENT ORDER WHICH SPECIFIC CASH DEPOSITS THE APPELLANT FAILED TO EXPLAIN. AS M ENTIONED EARLIER, THE APPELLANT HAD DEPOSITED CASH IN 4 ACCOUNTS AND THE SOURCE OF SUCH FUND WAS LINKED TO THE CAPITAL ACCOUNT OF THE APPELLANT WITH PARTNERSHIP F IRM M/S. KRIMPI DISTILLERY. IN VIEW OF THE ABOVE, I AM NOT INCLINED TO AGREE WITH THE FINDINGS OF THE AO. THUS, THE ANSWER TO THE QUESTION WHETHER SOURCE OF CASH D EPOSITS OF RS. 76,49,586/- WAS EXPLAINED/JUSTIFIED CONSIDERING THE DOCUMENTS SUBMI TTED BEFORE AO IS IN AFFIRMATIVE. THEREFORE, THE AO IS DIRECTED TO DELET E THE ADDITION MADE IN THIS PART GROUND RAISED. THUS, THESE GROUNDS (GROUND 2 & 3) OF APPEAL ARE ALLOWED. 15. WE FURTHER OBSERVE THAT IN THE COPY OF LEDGER A CCOUNT OF ASSESSEE IN THE BOOKS OF M/S. KRIMPI DISTILLERY WHE REIN ASSESSEE IS A PARTNER, THERE ARE REGULAR CASH WITHDRAWALS ROUND T HE YEAR AND IT HAS BEEN ARGUED BEFORE US THAT THESE CASH WITHDRAWALS H AVE BEEN DEPOSITED IN THE SAVINGS BANK ACCOUNT OF THE ASSESS EE. IF WE TAKE IN ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 11 TOTALITY WE FIND THAT TOTAL CASH WITHDRAWAL FROM M/ S. KRIMPI DISTILLERY ARE FAR MORE THAN THE CASH DEPOSITS IN THE BANK ACC OUNT DURING THE YEAR BUT WHEN WE EXAMINE THE INDIVIDUAL CASH DEPOSI TS IN VARIOUS BANK ACCOUNTS WITH MONEY WITHDRAWN FROM M/S. KRIMPI DISTILLERY THE STORY SEEMS LITTLE DIFFERENT. WE TOOK AN INSTANCE A S PER WHICH ON 20.10.2004 & 21.10.2004 CASH OF RS.20 LACS AND RS.1 6 LACS WAS WITHDRAWN BY ASSESSEE FROM M/S. KRIMPI DISTILLERY. NOW WHEN WE GO THROUGH CASH BOOK AT PAGE 121 TO 123 OF THE PAPER B OOK IN ORDER TO EXAMINE AS TO WHETHER THIS CASH AMOUNT WAS DEPOSITE D IN THE BANK ACCOUNT, WE FIND THAT ON 20 TH OCTOBER, 2004 TOTAL CASH DEPOSIT IS OF RS.2,97,940/- WHICH HAS BEEN DEPOSITED IN PARTS IN 10 INSTALMENTS AND EACH AMOUNT IS BETWEEN RS.20000/- TO RS.30000/- MORE SPECIFICALLY THE FIGURES ARE 23540/-, 26,130/-, 23, 250/- AND SO ON. SIMILARLY ON 21 ST OCTOBER 2004 ON SIMILAR PATTERN RS.2,98,580/- HAS BEEN DEPOSITED FROM 25.10.2004 TILL 30.10.2004 AGAI N IN SMALL AMOUNTS NORMALLY RANGING FROM 20,000/- TO 26,000/- WERE DEPOSITED IN VARIOUS BANK ACCOUNT HELD BY ASSESSEE. WE OBSERV E THAT ROUND THE YEAR SUCH AMOUNTS RANGING FROM RS.20,000/- TO RS.30 ,000/- HAVE BEEN DEPOSITED AND THERE IS NO DIRECT CORRELATION W ITH THE LUMP SUM WITHDRAWALS FROM PARTNERSHIP FIRM M/S KRIMPI DISTIL LERY. WHEN IT WAS QUESTIONED DURING THE COURSE OF HEARING TO THE LD. AR ABOUT THIS MODUS OPERANDI FOR DEPOSITING THE SMALL AMOUNTS AND THAT TOO NOT IN ROUND FIGURE, LD. AR FAILED TO GIVE A FAIR REPLY. I N THIS SITUATION, WE FIND FROM THE FACE OF RECORDS BEFORE US, THAT ASSESSEE I S UNABLE TO PROVE DIRECT NEXUS OF WITHDRAWAL IN CASH FROM PARTNERSHIP FIRM AND DEPOSITING THE SAME TO THE BANK ACCOUNT OF ASSESSEE . WE FURTHER OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS ASSESSEE ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 12 FAILED TO SUPPLY THIS INFORMATION RELATING TO CASH DEPOSITS IN THE BANK ACCOUNTS. IN SUCH SITUATION IT WILL BE JUSTIFIED IF THIS ISSUE OF DEPOSITING OF CASH OF RS.76,49,586/- IS RESTORED BACK TO THE F ILE OF LD. ASSESSING OFFICER TO EXAMINE THE NEXUS OF DEPOSITING WITH THE WITHDRAWAL FROM PARTNERSHIP FIRM M/S. KRIMPI DISTILLERY TO HIS SATI SFACTION. IF THE ASSESSEE IS ABLE TO DEMONSTRATE TO THE SATISFACTION OF ASSESSING OFFICER ABOUT THE SOURCE OF CASH AND ITS DEPOSIT TO THE BANK ACCOUNT THEN THIS ADDITION OF RS.76,49,586/- MAY BE DELETED . NEEDLESS TO MENTION, ASSESSEE SHOULD BE ALLOWED SUFFICIENT OPPO RTUNITY OF BEING HEARD AND THE MATTER BE TAKEN EXPEDITIOUSLY ON THE PART OF REVENUE. WE THEREFORE, ALLOW THIS GROUND OF REVENUE FOR STAT ISTICAL PURPOSES. 16. GROUND NOS. 3 & 4 ARE OF GENERAL NATURE WHICH N EED NO ADJUDICATION. 17. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 18. NOW WE TAKE UP THE CROSS OBJECTION OF ASSESSEE WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CROSS OBJECTOR PRAYS THAT THE HON'ABLE COMMISSIONER OF IN COME TAX (APPEALS) - VALSAD FCIT(A)] FAILED TO DISPOSE OF GR OUND NO.L OF THE APPEAL IN HIS ORDER FOR THE CROSS OBJECTOR'S CHALLE NGE TO THE ENTIRE RE- OPENING PROCEEDINGS U/S 147 BY ISSUANCE OF NOTICE U /S 148 AND CONSEQUENTIALLY THE ASSESSMENT ORDER PASSED U/S 143 (3). 2. ON THE FACTS ARID CIRCUMSTANCES OF THE CASE AND IN LAW, THE CROSS OBJECTOR PRAYS THAT THE HON'ABLE CIT(A) FAILED TO D ISPOSE OF ADDITIONAL ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 13 GROUND OF APPEAL IN HIS ORDER FOR THE CROSS OBJECTI ON AS TO THE FACT THAT THE LEARNED ASSESSING OFFICER (A O) DID NOT VERIFY THE FACT BASED ON AIR INFORMATION BEFORE RE-OPENING ASSESSMENT U/S 14 7 BY ISSUING NOTICE U/S 148. 3. BOTH THE ABOVE GROUNDS OF CROSS-OBJECTIONS ARE WITH OUT PREJUDICE TO ONE ANOTHER. 4. THE RESPONDENT RESERVES HIS RIGHT TO ADD, ALTER, AM END AND/OR DELETE ANY OF THE ABOVE GROUNDS OF CROSS-OBJECTIONS AND CRAVES LEAVE FOR THE SAME. 5. THE RESPONDENT CRAVES LEAVE TO MAKE FURTHER SUBMISS IONS DURING THE COURSE OF APPELLATE PROCEEDINGS. 19. ASSESSEE HAS RAISED 5 GROUNDS IN THE CROSS OBJE CTION BUT THE ONLY ISSUE INVOLVED IS CHALLENGING THE ORDER OF LD. CIT(A) FOR FAILING TO DISPOSE OF THE GROUND NO.1 OF THE APPEAL IN HIS ORD ER. ON PERUSAL OF THE ORDER OF LD. CIT(A), WE FIND THAT THIS GROUND O F CROSS OBJECTION NEEDS TO BE REJECTED AS THE GROUND NO.1 RAISED BEFO RE LD. CIT(A) HAS DULY BEEN ADJUDICATED BY LD. CIT(A) BY OBSERVING AS UNDER :- 5.3 DECISION :~ I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE FACT OF THE CASE IS THA T THE AO RECEIVED AIR INFORMATION ON THE BASIS OF WHICH HE RECORDED THE R EASONS TO BELIEVE AND ISSUED NOTICED TO THE APPELLANT U/S. 148 OF THE ACT. THE A PPELLANT FILED REPLY TO THE SAID NOTICE RAISING CERTAIN OBJECTIONS WHICH THE AO ADDR ESSED TO THE SATISFACTION OF THE APPELLANT WHICH IS APPARENT FROM THE RECORD/ASSESSM ENT ORDER. TO BE PRECISE, THE AO GAVE THE REASONS RECORDED TO THE APPELLANT AND C LARIFIED THE BASIS ON WHICH THE ASSESSMENT WAS RE-OPENED. IT IS ALSO UNDISPUTED FAC T THAT THE AO RE-OPENED THE ASSESSMENT WHICH WAS COMPLETED UNDER SUMMARY. THERE FORE, IT CLEARLY ESTABLISHED THAT THE ISSUES WHICH NEEDED EXAMINATION/VERIFICATI ON HAVE NEVER BEEN EXAMINED EARLIER. IN VIEW OF THE FACTUAL MATRIX OF THE CASE, I AM OF THE OPINION THAT THE AO HAS COMPLIED WITH THE NECESSARY CONDITIONS FOR RE-O PENING THE ASSESSMENT IN THIS CASE. THUS, THIS GROUND OF APPEAL IS DISMISSED. ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 14 20. WE OBSERVE THAT LD. CIT(A) HAS RIGHTLY DISMISSE D THE GROUND. WE FIND NO REASON TO INTERFERE WITH HIS FINDINGS. T HE SAME IS UPHELD. 21. IN THE RESULT, THE CROSS OBJECTION IS DISMISSED . 22. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2016 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 11/8/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2127/A/2013 & CO NO.9/A/14 ASST. YEAR 2005-06 15 1. DATE OF DICTATION: 9/08/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 10/08/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 12/8/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: