ITO 16(3)(4), MUMBAI V. DHIREN KIMJIBHAI PATEL, MUMBAI

ITA 1170/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8025 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MURLIDHAR
• Assessee Lawyers: SUMAN KUMAR
• Keywords: Unexplained cash credit; Gift; Peak credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D. KARUNAKARA RAO (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 553/MUM/2013 ASSESSMENT YEAR: 2009-10 SHRI. DHIREN KHIMJIBHAI PATEL. 17, 1 ST FLOOR, RANCHHOD BUILDING, OPP. TIWARI MITHAIWALA, OPERA HOUSE, MUMBAI- 400 004. PAN: AMIPP7035L VS. THE ITO - 16(3)(4), MATRU MANDIR, TARDEO, MUMBAI- 400 034. (APPELLANT) (RESPONDENT) & ITA NO. 1170/MUM/2013 ASSESSMENT YEAR: 2009-10 THE ITO - 16(3)(4), MATRU MANDIR, TARDEO ROAD, MUMBAI- 400 007. VS. SHRI. DHIREN KHIMJIBHAI PATEL. 17, 1 ST FLOOR, RANCHHOD BUILDING, OPP. TIWARI MITHAIWALA, OPERA HOUSE, MUMBAI- 400 004. PAN: AMIPP7035L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. R. MURLIDHAR RESPONDENT BY : SHRI. SUMAN KUMAR DATE OF HEARING: 0 6/01/2017 DATE OF PRONOUNCEMENT: 28/02/20 17 O R D E R PER RAM LAL NEGI, JM THESE CROSS APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE AND THE REVENUE RESPECTIVELY AGAINST ORDER DATED 22/11/2012 PASSED BY THE LD. CIT (APPEALS)-27, MUMBAI FOR THE ASST. YEAR 2009-10, WH EREBY THE LD. CIT(A) 2 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGA INST THE ASSESSMENT ORDER DATED 23/12/2011 PASSED U/S 143(3) OF THE INCOME TA X ACT, 1961 (FOR SHORT THE ACT). ITA NO. 553/MUM/2013 (A.Y- 2009-10) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE EN GAGED IN THE BUSINESS OF DIAMOND AND OTHER PRECIOUS STONES FILED ITS RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 2,18,810/-. THE RETURN OF INCOME WAS PROCESSED AND AFTER SCRUTINY ASSESSMENT WAS PASSED U/S 143 (3) OF THE A CT DETERMINING THE TOTAL INCOME OF RS. 50,11,020/- AFTER MAKING INTER ALIA ADDITION OF RS. 47,78,246/- AS UNDISCLOSED INCOME. THE ASSESSMENT ORDER WAS CHA LLENGED BEFORE THE LD. CIT (A), WHO AFTER HEARING THE ASSESSEE PARTLY ALLO WED THE APPEAL. 3. STILL AGGRIEVED, THE ASSESSEE HAS FILED THE PRES ENT APPEAL ON THE FOLLOWING EFFECTIVE GROUNDS: 1. THE LEARNED CIT (A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT THAT ONE OF THE SOURCES OF CASH DEPOSITS MADE BY HIM IN HIS BANK ACCOUNT IS GENUINE CASH GIFTS OF RS . 6,10,000/- RECEIVED BY HIM FROM HIS RELATIVES. 2. THE LEARNED CIT (A) ERRED IN HOLDING AND DIRECTING THE LEARNED AO TO CONSIDER RS. 8,73,162/- (BEING THE PE AK CREDIT OF RS. 10,22,718/-) AS UNEXPLAINED CASH CRED IT U/S 68 OF THE ACT. 3. WITHOUT PREJUDICE TO GROUND NO. 2, THE LEARNED CIT (A) ERRED IN NOT REDUCING THE OPENING CASH BALANCE OF RS. 2,2 3,987/- FROM PEAK CREDIT OF RS. 10,22,718/- TO ARRIVE AT UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 2 & 3 OF THE APPEAL. IN VIEW OF 3 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 THE SUBMISSION OF LD. COUNSEL, GROUND NO. 2 AND 3 O F THE APPEAL ARE DISMISSED AS NOT PRESSED. AS REGARDS THE FIRST GROU ND OF APPEAL, THE LD. COUNSEL SUBMITTED THAT THE LD. CIT (A) HAS ERRED IN REJECTING THE CLAIM OF APPELLANT THAT ONE OF THE SOURCES OF ACTUAL DEPOSIT S MADE BY HIM IN HIS BANK ACCOUNTS IS THE AMOUNT OF RS. 6,10,000/- RECEI VED IN GIFTS FROM HIS RELATIVES. THE LD. COUNSEL FURTHER CONTENDED THAT T HE ASSESSEE HAS SUBMITTED DECLARATIONS FROM ALL THE FIVE PARTIES FR OM WHOM GIFTS AMOUNTING TO RS. 6,10,000/- WERE RECEIVED. THE ASSE SSEE HAS ALSO SUBMITTED THE EXTRACT OF FORM 7 & 12, FARMERS BOOK , TRANSLATED COPY OF REVENUE RECORD AND OTHER DOCUMENTS TO PROVE THE IDE NTITY AND CREDITWORTHINESS OF THE DONORS AND GENUINENESS OF T HE TRANSACTION. HENCE, THE ORDER PASSED BY THE LD. CIT (A) IS CONTRARY TO THE EVIDENCE ON RECORD AND IS LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. DR RELYING ON THE CONCUR RENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT THE FINDINGS O F THE LD. CIT(A) WITH REGARD TO THIS GROUND ARE BASED ON THE EVIDENCE ON RECORD AND AS PER THE SETTLED PRINCIPLES OF LAW. SINCE, THE ASSESSEE HAS FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE DONORS AND GENUINENESS OF T RANSACTION, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE FINDINGS OF THE AO . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US BY THE PARTIES. THE LD. CIT(A) HAS CONFI RMED THE FINDINGS OF AO HOLDING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE CONTENTS OF THE ASSESSMENT ORDER AND THE APPELLANTS SUBMISSIONS. I NOTE THAT FROM THE COPIES OF THE GIFT DECLARATIONS PLACED ON RECORD, T HE CREDITWORTHINESS OF THE IMPUGNED DONORS IS NOT ESTA BLISHED. THE RESPECTIVE DONORS HAVE MERELY DECLARED THAT THE Y ARE AGRICULTURISTS FOR THE PAST 35 YEARS AND HAVE SUBST ANTIAL LAND HOLDINGS AND EARNING INCOME FROM AGRICULTURAL PRODUCE. BEYOND THIS, NO FURTHER INFORMATION IS AVA ILABLE AS 4 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 TO THE EXTENT OF LAND OWNED BY THEM, THE LOCATION, THE CROPS GROWN THEREIN, THAT THE YEAR WISE AGRICULTURAL INCO ME EARNED AND THE LIKELY SAVINGS OF THE FAMILY ETC. IT IS ALSO NOTED THAT DESPITE BEING GIVEN AN OPPORTUNITY AT TH E TIME OF ASSESSMENT PROCEEDINGS, THE APPELLANT FAILED TO PRO DUCE THE AFORESAID DONORS FOR NECESSARY EXAMINATION BY THE A .O. IN VIEW OF THE ABOVE FACTS, THE DECLARATIONS PLACED ON RECORD BY THE APPELLANT ARE VAGUE AND SELF SERVING DOCUMEN TS WHICH CANNOT BE CONSIDERED AS CREDIBLE EVIDENCE. TH EREFORE, I AM OF THE CONSIDERED OPINION THAT THE CLAIM OF RE CEIVING GIFTS OF RS. 6,10,000/- AS SOURCE FOR THE IMPUGNED CASH DEPOSITS CANNOT BE ACCEPTED. AS REGARDS THE OTHER D EPOSITS, I HOLD THAT THERE ARE REGULAR CASH DEPOSITS AND ALS O CASH WITHDRAWALS FROM TIME TO TIME. 7. WE HAVE GONE THROUGH THE CONTENTS OF THE AFFID AVITS SWORN BY S/SH. BHARATBHAI HAMABHAI GABANI, GORDHANBHAI HAMABHAI GA BANI, HAMABHAI KESHAVBHAI GABANI, BHAGAWANBHIA NANJIBHAI GOYANI AN D KAJNIBHAI NANJIBHAI GOYANI FROM WHOM THE ASSESSEE ALLEGEDLY R ECEIVED THE GIFT IN CASH AMOUNTING TO RS. 6,10,100/-. THE SAID PERSONS HAVE STATED IN THE AFFIDAVITS THAT THEY BEING RELATIVES OF THE ASSESSE E PAID THE AMOUNTS IN QUESTION ON 01.04.2008 AS GIFT OUT OF NATURAL LOVE AND AFFECTION, HOWEVER, THEY HAVE NOT MENTIONED ANY OCCASION ON WHICH THE A MOUNTS WERE RECEIVED IN GIFT. THE ASSESSEE HAS PLACED ON RECORD THE EXT RACT OF FORM 7 & 12, FARMERS BOOK, TRANSLATED COPY OF REVENUE RECORD AN D OTHER DOCUMENTS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE DONO RS AND GENUINENESS OF THE TRANSACTION. THE AO HAS REJECTED THE CONTENTION OF THE ASSESSEE HOLDING THAT THE TRANSACTION IS NOT GENUINE AS THE DEPOSITS IN THE ACCOUNT HAVE BEEN MADE ON DIFFERENT DATES WHEREAS, THE TOTAL AMO UNT OF RS. 6,10,000/- WAS RECEIVED ON 1 ST APRIL, 2008. SIMILARLY, AO HAS POINTED OUT THAT TW O DONORS HAVE WRITTEN THEIR SURNAME AS GOYANI, WHEREA S THE REMAINING THREE PERSONS HAVE WRITTEN THEIR SURNAME AS GABANI. THERE FORE, THE PERSONS HAVING SURNAME AS GOYANI CANNOT BE THE BROTHERS OF ASSESSEES FATHER AS 5 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 THE ASSESSEES SURNAME IS PATEL. WE NOTICE THAT DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO PRODUCE THE D ONORS TO VERIFY THEIR IDENTITY AND CREDITWORTHINESS, THEIR RELATIONS WITH THE ASSESSEE AND GENUINENESS OF THE TRANSACTION, HOWEVER, THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE FILED WRITTEN REPLY MENTIONING THAT TH E ASSESSEE IS OUT OF STATION AND HE IS NOT IN A POSITION TO PRODUCE THE DONORS AT SUCH A SHORT NOTICE. WE FURTHER NOTICE THAT THE AR HAD NOT SOUGH T TIME TO PRODUCE THE DONORS. EVEN THIS REQUEST WAS NOT MADE BEFORE THE F IRST APPELLATE AUTHORITY DURING APPELLATE PROCEEDINGS. AS PER THE SETTLED LA W THE ONUS IS UPON THE ASSESSEE TO ESTABLISH IDENTITY AND CREDITWORTHINESS OF THE DONOR AND GENUINENESS OF THE TRANSACTION. HENCE, IN OUR OPIN ION THE DOCUMENTS SUBMITTED BY THE ASSESSEE IS NOT SUFFICIENT TO ESTA BLISH CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS OF THE TRANSACTION. I N THE LIGHT OF THE AFORESAID FACTS, WE DO NOT FIND ANY LEGAL OR FACTUA L INFIRMITY IN THE IMPUGNED ORDER TO INTERFERE WITH. HENCE, WE ARE OF THE CONSI DERED VIEW THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS O F THE DONORS AND THE GENUINENESS OF THE TRANSACTIONS. WE, THEREFORE, UPH ELD THE FINDINGS OF THE LD. CIT (A) AND DISMISS THE ONLY GROUND OF APPEAL O F THE ASSESSEE. ITA NO. 1170/MUM/2013 A.Y. (2009-10) THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT (A) HAS ERRED IN ALLOWING RELIEF OF RS. 39,0 5,084/ TO THE ASSESSEE BY TREATING PEAK CREDIT OF THE UNDI SCLOSED BANK STATEMENTS AS INCOME OF THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT T HAT THE CHEQUE DEPOSIT OF RS.20, 000/- IN THE UNDISCLOSED B ANK ACCOUNT WAS NOT EXPLAINED BY THE ASSESSEE. 6 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT (A) HAS ERRED IN NOT CONSIDERING THE TOTAL INTEREST CREDITED OF RS. 10, 246/ IN THE UNDISCLOSED ACCOUN T AS THE INCOME OF THE ASSESSEE. 2. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT (A) HAS ERRED IN ALLOWING RELIEF OF RS. 39,05,084/- TO THE ASSESSEE BY TREATING PEAK CREDIT OF THE UNDISCLOSED BANK STATEMENTS AS INCOME OF THE ASSESSEE. THE LD. DR FURTHER SUBMITTE D THAT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF CHEQUE DEPOSITED IN THE ASSESSEES UNDISCLOSED ACCOUNT, THE AO HAS RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE HOLDING THE SAME AS UNDISCLOSED INCOME . SIMILARLY, THE AO HAS RIGHTLY ADDED THE TOTAL INTEREST CREDITED OF RS . 10,246/-IN THE UNDISCLOSED ACCOUNT, TO THE INCOME OF THE ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND SUBMITTED THAT SINCE THE LD. CIT(A) HAD DIRECTED THE AO TO CONSIDE R THE PEAK CREDIT OF THE BANK STATEMENT AS ASSESSEES INCOME INSTEAD OF TREA TING THE ENTIRE DEPOSITS WHILE PASSING APPELLATE ORDER FOR THE ASSESSMENT YE AR 2008-09, THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE AO IN THE ASSESSMEN T YEAR UNDER CONSIDERATION TO CONSIDER THE PEAK CREDIT. THEREFOR E, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. 4. IN THE LIGHT OF THE RIVAL CONTENTION, WE HAVE P ERUSED THE MATERIAL PLACED BEFORE US. THE LD. CIT(A) HAS DECIDED THE SA ID ISSUES HOLDING AS UNDER:- AS REGARDS OTHER DEPOSITS, I HOLD THAT THERE ARE R EGULAR CASH DEPOSITS AND ALSO CASH WITHDRAWAL FROM TIME TO TIME. IT IS ALSO NOTED THAT APPELLANT HAS TRANSACTED HIS BUSINESS OF GOLD JEWELLERY THROUGH THE AFORESAID BANK ACCOUN T THAT THE CASH WAS DEPOSITED IN THE APPELLANTS BANK ACCO UNT FROM DIFFERENT STATIONS LIKE HYDERABAD AND BANGALOR E. 7 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 WHILE DISPOSING THE APPEAL FOR THE A.Y. 2008-09 IN RESPECT OF THE ADDITION MADE BY THE AO ON ACCOUNT OF CASH D EPOSITS IN THE AFORESAID BANK ACCOUNT, I HAVE DIRECTED THE AO TO CONSIDER THE PEAK CREDIT OF THE BANK STATEMENT AS APPELLANTS INCOME INSTEAD OF TREATING THE ENTIRE D EPOSITS AS INCOME. THE FACTS BEING SIMILAR FOR THE YEAR UNDER CONSIDERATION ALSO, I DIRECT THE AO AT PRESENT TO C ONSIDER THE PEAK CREDIT OF RS.10,22,718/- APPEARING IN THE BANK ACCOUNT ON 22/01/2009, AS REDUCED BY THE OPENING BALANCE OF RS. 1,49,556/- AS APPELLANTS INCOME FRO M THE UNDISCLOSED SOURCES, BEING CASH CREDITS U/S 68 OF T HE ACT. IN OTHER WORDS, THE AMOUNT OF RS. 8,73,162/- SHALL BE ASSESSED AS INCOME IN PLACE OF RS. 47,78,246/-. THA T APART, INTEREST OF RS. 3,936/- EARNED FROM THE AFORESAID B ANK ACCOUNT FROM THE DATE OF PEAK CREDIT TO 31/03/2009 SHALL ALSO BE ASSESSED AS INCOME IN ADDITION TO THE PEAK CREDIT. APPELLANT PARTLY SUCCEEDS ON THIS GROUND. 5. WE NOTICE THAT THE LD. CIT(A) HAS DECIDED THE SAID ISSUES FOLLOWING THE DECISION TAKEN BY THE CIT IN ASSESSEES OWN CASE FO R THE A.Y. 2008-09. HENCE WE DO NOT FIND ANY MERIT IN THE CONTENTIONS O F THE LD. DR. ACCORDINGLY, WE DISMISS ALL THE GROUNDS OF APPEAL O F THE REVENUE. 6. IN THE RESULT, BOTH APPEALS FOR THE ASSESSMENT YEAR 2009-10 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 TH FEBRUARY, 2017. SD/- SD/- (D.KARUNAKARA RAO) (RAM L AL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:28/02/2017 8 ITA NO. 533 & 1170/MUM/2015 ASSESSMENT YEAR: 2009-10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA