SATISHKUMAR KESHAVLAL, MUMBAI V. ITO (IT)-3(1)(1), MUMBAI

ITA 1065/MUM/2023

AI Insights

The case involves Satish Kumar Keshavlal, a non-resident, who appealed against the order of the Learned Commissioner of Income Tax (Appeals) concerning the assessment year 2012-13. The Assessing Officer had reopened the assessment based on financial transactions observed in the ITD system, including mutual fund investments and time deposits. The Assessing Officer added \\u20b920,00,000 as unexplained investments in mutual funds and \\u20b91,62,570 as unexplained interest income to the assessee's total income. The CIT(A) upheld these additions, leading to the appeal before the Tribunal. The Tribunal found that the assessee had provided sufficient evidence to substantiate the mutual fund investment, leading to the deletion of the addition under section 69 of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123732 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: I
• Next Hearing Date: 05-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 02-04-2023
• Other Referred Cases: Collector, Land Acquisition v. MST. Katiju and others, [1987]167 ITR 471
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice; Condonation of delay; FORM 26AS
• Section: 69; 148; 143(3); 142(1); 133(6); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, HON'BLE JUDICIAL MEMBER ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal C/o. H.C Mehta 7 Associates 26, Juhu Supreme Shopping Centre Gulmohur Cross Road No. 9 Juhu, Mumbai - 400049 PAN: AUQPK4033R v. ITO (International Taxation)-3(1)(1) 18 th Floor Air India Building, Nariman Point Mumbai – 400 021 (Appellant) (Respondent) Assessee Represented by : Shri Anuj Kisnadwala Department Represented by : Shri Anil Sant Date of Conclusion of Hearing : 06.07.2023 Date of Pronouncement : 13.07.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), 57, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 31.01.2023 for the A.Y.2012-13. ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 2 2. At the outset, we observe that the present appeal is filed by the assessee with a delay of two (2) days. Ld. Counsel for the assessee prayed for condonation of delay in the interest of natural justice. Ld. DR has not raised any objection for condonation for delay and admission of appeal for adjudicating on merits. Accordingly, following the decision of Hon'ble Supreme Court in the case of Collector, Land Acquisition v. MST. Katiju and others, [1987]167 ITR 471, we condone the delay and proceed to dispose the appeal on merits. 3. Brief facts of the case are, assessee is a Non-resident and has not filed the return of income for the A.Y. 2011-12. Based on the information available on the NMS module of i-taxnet, ITD system of the Department, Assessing Officer observed that the Assessee during the year under consideration has entered into the following financial transactions - i. Mutual Funds Investments Rs. 20,00,000 ii. Time Deposits Rs.8,16,35,542 iii. Income as per 26AS Rs. 82,09,548 Total Rs.9,18,45,090 4. Based on the above information, Assessing Officer reopened the assessment and notice u/s 148 of Income-tax Act, 1961 (in short “Act”), ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 3 was issued and served on the assessee. Notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. In response, assessee filed the return of income offering total Income of ₹.40,23,490/- and claiming refund of ₹.10/-. Assessee furnished the relevant documents as called for by the Assessing Officer. 5. During the course of the assessment proceedings, Assessing Officer asked the assessee to explain the source of income of ₹.82,09,548/- received from Bank of India and Kotak Mahindra Mutual Fund, and also as to whether the same was reflected in his Return of Income. In response, Assessee vide reply dated 01.12.2019, has submitted that the interest income arisen is only ₹.81,285/- and not ₹.82,09,548/-. The Assessee vide point nos. 8 and 11 of the said letter, has submitted that he had not made any purchase of Kotak Mahindra Mutual Fund. Subsequently, Assessing Officer issued notices u/s 133(6) of the Act dated 02.12.2019 to Kotak Mahindra Mutual Fund and Bank of India, soliciting the details of transaction made by the assessee. In response to the notice the Manager, Investor Relations of Kotak Mahindra Mutual Fund, has submitted that the Assessee made an investment of ₹.20 lakhs in Kotak Multi Asset Allocation Fund Monthly Dividend on 26.04.2011, by issuing cheque no.291520 on Standard Chartered Bank, Fort Branch, Mumbai. ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 4 The Chief Manager, Bank of India, NRI Branch, confirmed that all terms deposits during the period under consideration were renewed/reinvested from existing NRE/FCNR deposits. The Assessee vide show cause notice dated 12.12.2019 was provided the copy of the letter dated 02.12.2019 of Kotak Mahindra Mutual Fund, and requested to Show Cause as to why the said investment of ₹.20,00,000/- should not be treated as his unexplained investment u/s 69 of the Act. 6. Further, Assessing Officer observed that as per 26AS Assessee has received interest of ₹.81,285/- on 29.02.2012 and interest of ₹.81,285/- on 29.02.2012, totaling to ₹.1,62,570/-, which was not declared by the Assessee in his Return of Income. The Assessee was required to explain as to why the said income should not be brought to tax under the head 'Income from Other Sources' for the year under consideration. 7. In response, Assessee failed to respond, and did not file any reply, accordingly, Assessing Officer proceeded to complete the assessment by making addition of ₹.20,00,000/- being Unexplained Investments in Mutual Funds and added ₹.1,62,570/- being receipt of unexplained interest and added to the total income of the assessee. ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 5 8. Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and Ld.CIT(A) after considering the detailed submissions of the assessee Ld.CIT(A) sustained the addition made by the Assessing Officer. 9. Aggrieved, assessee is in appeal before us raising following grounds in its appeal: - “1. The learned CIT (A) has erred in law and in facts in passing the impugned order in & violation of the principles of the natural justice. 2. The learned CIT (A) has erred in law and in facts in upholding the order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961, which is illegal and bad in law. 3. The learned CIT (A) ought to have held that the reopening of the assessment by issuing of notice u/s. 148 of the Act was illegal and bad in law. 4. The learned CIT(A) has erred in law and on facts in upholding addition of Rs.20,00,000/-u/s. 69 of the Act. 5. The learned CIT(A) has erred in law and on facts in confirming addition of Rs. 81,825/- on account of interest income. 6. The learned CIT (A) has erred in law and on facts in sustaining the levy of interest u/s. 234A, 2348 and 234C of the Income-tax Act.” 10. Ground No.1 is general in nature, accordingly the same is dismissed. 11. At the outset, Ld. AR of the assessee submitted that Ground Nos. 2, 3 and 5 are not pressed by the assessee. Accordingly, the same are dismissed as not pressed. ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 6 12. The solitary ground for adjudication is Ground No. 4, which is the upholding the addition of ₹.20,00,000/- u/s. 69 of the Act, Ld. AR of the assessee referring to Page No. 1 to 4 of the Paper Book which are the confirmations received from Kotak Mahindra Mutual Fund wherein they have confirmed the investment dated 26.04.2011 along with the cheque details (291520 – Standard Chartered Bank). The assessee has substantiated by filing the bank statements. Ld. AR submitted that Assessing Officer made the addition with the observation that assessee has not submitted any statement. Further, Ld.AR submitted that Ld.CIT(A) has rejected the submissions of the assessee with the observations that the date mentioned in the statement refers to the year 2012 and he brought to our notice the observations made by the Ld.CIT(A) at Page No. 4 of the appellate order. Ld. AR further submitted that the assessee has liquidated the above mutual fund in the same year. He brought to our notice the Form 26AS dated 29.02.2012 and assessee has received the same on 01.03.2012. He submitted that the date mentioned as 30.04.2012 is nothing but statement date. He prayed that the transaction is genuine and the above statements clearly shows that the transaction is genuine. ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 7 13. On the other hand, Ld. DR relied on the order of the lower authorities. 14. Considered the rival submissions and material placed on record, we observe that the assessee has made the investment of ₹.20 lakhs on 26.04.2011 and redeemed the same on 01.03.2012. The Kotak Mahindra Mutual Fund has confirmed the same by submitting confirmation. Ld.CIT(A) has doubted the date of statement. The assessee has brought on record all the relevant information relating to this transaction. We do not see any reason to reject the same. Therefore, we are inclined to direct the Assessing Officer to delete the addition made u/s. 69 of the Act. Accordingly, Ground No.4 raised by assessee is allowed. 15. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 13 th July, 2023. Sd/- Sd/- (RAHUL CHAUDHARY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 13.07.2023 Giridhar, Sr.PS ITA NO. 1065/MUM/2023 (A.Y. 2012-13) Satish Kumar Keshavlal Page No. 8 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum