ITO 1(1)(1), MUMBAI V. PRAMOD RAM NAGPAL, MUMBAI

ITA 1196/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84147 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMENAND J
• Assessee Lawyers: BALDEV U IDNANI
• Keywords: Salary income
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 1196/MUM/2013 ASSESSMENT YEAR: 2009-10 ITO1(1)(1) R. NO. 534/579 AAYAKAR BHAVAN M.K. ROAD MUMBAI- 400 020 VS. SHRI PRAMOD RAM NAGPAL MEGHJI BHAVAN, GROUND FLOOR, METRO CINEMA ROAD, DHOBI TALAO, MUMBAI- 400 020 PAN: AAHPN 2577 Q (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI BALDEV U. IDNANI REVENUE BY : SHRI PREMENAND J. DATE OF HEARING : 13 . 11 . 2014 DATE OF ORDER : 19.11.2014 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGA INST ORDER DATED 19.11.2012, PASSED BY THE LD.CIT(A) -1, FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3), FOR THE A.Y. 2009-10, MAINLY ON THE FOLLOWING GROUNDS OF APPEAL:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) IS RIGHT IN DELETING THE ADDITIO N OF RS.28,88,000/- MADE U/S 69 OF THE IT ACT TOWARDS UN ACCOUNTED CASH DEPOSITS? ITA NO. 1196/MUM/2013 SHRI PRAMOD RAM NAGPAL ASSESSMENT YEAR: 2009-10 2 WHETHER ON THE FACTS AND CIRCUMSTANCE SO THE CASE A ND IN LAW, THE LD.CIT(A) IS RIGHT IN DELETING THE ADDITION OF RS.8,64,900/- MADE U/S 68 OF THE I.T. ACT TOWARDS UNEXPLAINED CASH IN HAND BY ADMITTING ADDITIONAL EV IDENCE IN VIOLATION OF RULE 46A? 2. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS AN INDIVIDUAL, WHO IS HAVING SALARY INCOME AS DIRECTOR IN M/S. APEX TRAVE LS AND TOURS PVT. LTD.; SALARY AND SHARE PROFIT FROM PARTNERSHIP FIRM , M/S. BALAJI SECURITIES; AND HE IS ALSO DOING BUSINESS OF SHARE TRADING IN T HE INDIVIDUAL CAPACITY. AS PER THE AIR INFORMATION, THE ASSESSEE HAS MADE C ASH DEPOSITS OF SUMS AGGREGATING RS.28,88,000/- ON VARIOUS DATES IN THE CURRENT ACCOUNT WITH ORIENTAL BANK OF COMMERCE. ACCORDINGLY , THE ASSESSEE WAS REQUIRED TO EXPLAIN A SOURCE OF DEPOSITS IN THE COU RSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE IN RESPONSE SUBMITTED THA T, SOURCE OF DEPOSITS WERE FROM SHARE BUSINESS AND CASH WITHDRAW FROM THE CITY BANK AND OBC BANK. THE ASSESSING OFFICER NOTED THE DETAILS OF CASH FLOW STATEMENT OF THE WITHDRAWAL AND DEPOSITS IN THE OBC BANK. FROM SUCH DETAILS HE NOTED THAT, THE CASH DEPOSITS HAVE NOT B EEN MADE FROM WITHDRAWALS FROM THE BANK, AND HENCE HE CONCLUDED T HAT THESE CASH DEPOSITS ARE UNCOUNTED INCOME FROM UNDISCLOSED SOUR CES. HE FURTHER NOTED THAT, ASSESSEE HAS SHOWN CASH-IN-HAND IN BALA NCE-SHEET AS ON 31 ST MARCH 2009, AT RS.9,60,131/-, HOWEVER, AS ON 23 RD JANUARY 2009, THERE WAS CASH BALANCE OF RS.95,231/- ONLY. THE DIFFERENC E OF RS.8,64,000/- COULD NOT BE EXPLAINED BY THE ASSESSEE. HE ALSO OBS ERVED IN THE ASSESSMENT ORDER THAT, NO BOOKS OF ACCOUNT WERE PRO DUCED AND ASSESSEES EXPLANATION WAS GENERAL IN NATURE NOT SU PPORTED BY ANY AUTHENTIC EVIDENCE. THEREAFTER, HE DISCUSSED THE LE GAL POSITION AS GIVEN ITA NO. 1196/MUM/2013 SHRI PRAMOD RAM NAGPAL ASSESSMENT YEAR: 2009-10 3 IN SECTION 69 ALONG WITH VARIOUS DECISIONS TO JUST IFY THE ADDITION OF RS.28,88,000/- U/S 69 AND SUM OF RS.8,64,900/- U/S 68. 3. BEFORE THE LD.CIT(A) AS REGARDS THE CASH DEPOSIT S IN THE CURRENT ACCOUNT WITH OBC BANK FOR SUMS AGGREGATING RS.28,88 ,000/-, THE ASSESSEE SUBMITTED THAT IN THE ORDINARY COURSE OF H IS SHARE TRADING ACTIVITY, HE USED TO WITHDRAW THE MONEY AND ALSO MA KE DEPOSITS IN THE BANK ACCOUNT. ALL THE AMOUNTS WHICH HAVE BEEN WITHD RAWN AND DEPOSITED ARE RECORDED IN THE BOOKS OF ACCOUNT AND THE ENTRIES THEREIN ARE ITSELF PRIMARY EVIDENCE OF THESE TRANSACTIONS. THE ASSESSEE HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNT FOR SHARE TRAD ING WHICH WERE PRODUCED BEFORE THE LD. CIT(A). IT HAS ALSO BEEN CO NTENDED THAT IT WERE PRODUCED BEFORE THE AO, DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS AND TO THIS EXTENT AOS OBSERVATIONS IS NOT CORRECT. THE ASSESSEE HAS ALSO MAINTAINED CASH BOOK, WHEREIN ALL THE DETAILS OF CASH WITHDRAWN, CASH DEPOSITED AND CASH BALANCE HAS BEEN RECORDED ON THE DAY TO DAY BASIS. OUT OF THE CASH BALANCE IN THE B OOKS, AS AND WHEN REQUIRED, THE ASSESSEE HAD DEPOSITED THE MONEY IN T HE BANK FROM TIME TO TIME. FURTHER THE ASSESSEE HAD VARIOUS COMMITMEN TS FOR PAYMENT LIKE EMI OF HOUSE LOAN AND OTHER LOANS FOR WHICH, ASSESS EE WAS REGULARLY MAKING DEPOSITS FROM TIME TO TIME OUT OF CASH RECOR DED IN THE CASH BOOK. THE LD.CIT(A) AFTER EXAMINING THE ENTIRE RECO RDS AND BOOKS OF ACCOUNT AGREED WITH THE ASSESSEE THAT, THE CASH DEP OSITS MADE BY THE ASSESSEE IS FULLY EXPLAINED FROM CASH BOOK MAINTAIN ED BY THE ASSESSEE. THE RELEVANT OBSERVATIONS AND THE FINDING OF THE LD .CIT(A) IS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT, ASSESSMENT ORDER AND FACTS OF THE CASE. IT IS NOTED FROM THE BANK ACCOUNT OF THE ORIENTAL BANK OF COMMERCE AND ALSO F ROM THE ASH BOOK THAT THE CASH DEPOSITS OF RS.28,88,000/- ON VA RIOUS DATES IN ORIENTAL BANK OF COMMERCE HAS ARISEN OUT OF WITHDRA WALS FROM ITA NO. 1196/MUM/2013 SHRI PRAMOD RAM NAGPAL ASSESSMENT YEAR: 2009-10 4 CITY BANK, ICICI BANK, THE OPENING CASH IN HAND ON VARIOUS DATES. THIS FACT IS ALSO EVIDENT FROM THE DETAILED CHART PREPARED AND INCLUDED AT PAGE 3-8 OF THE ASSESSMENT ORDER. I AM NOT IN AGREEMENT WITH THE AO THAT IN SPITE OF EXCESS CASH AVAILABLE IN HAND, THE APPELLANT HAS WITHDRAWN CASH FROM ONE BAN K OR THE OTHER AND THEREFORE DEPOSITS IN OBC BANK ARE UNEXPL AINED. THE APPELLANT HAS SHOWN THAT THERE ARE MULTIPLE TRANSAC TIONS OF DEPOSITS AND WITHDRAWALS AND THAT SOURCE OF THESE T RANSACTIONS ARE EXPLAINED. I FIND THAT ON SIMILAR ADDITION WAS CONSIDERED AND DELETE BY MY PREDECESSOR FOR A.Y. 2008-09. I THEREF ORE, HOLD THAT THE ADDITION BY AO MERELY ON THE BASIS OF AIR INFOR MATION IS NOT WELL- FOUNDED AND THE SAME IS DIRECTED TO BE DELETE D. 4. REGARDING ADDITION OF RS.8,64,000/-, THE ASSESSE E SUBMITTED THAT, THE ASSESSING OFFICER HAS WRONGLY INFERRED THE CASH -IN-HAND OF 23.01.2009 AS THE FINAL CASH-IN-HAND. AS ON 23.01.2 009, THE ASSESSEE HAS A CASH BALANCE OF RS.95,231/-. FROM THIS DATE T O 31.03.2009, THE ASSESSEES CASH-IN-HAND HAD INCREASED TO RS.9,60,13 1/-. THESE CASH BALANCES ARE CLEARLY BORNE OUT FROM THE BOOKS OF AC COUNT. THE AO HIMSELF AS STATED AT TWO DIFFERENT DATES THERE ARE TWO DIFFERENCE CASH BALANCES. HE HAS NOT TAKEN THE FIGURES OF CASH BETW EEN 23.01.2009 AND 31.03.2009. THE ACTUAL CASH BALANCE AS ON 31.03.200 9 WAS AT RS.9,60,131/-, WHICH WAS SHOWN IN THE BALANCE SHEET . THUS THE ASSESSING OFFICER HAS COMPLETELY IGNORED THE TRANSA CTIONS AFTER 23.01.2009, WHICH IS NOT CORRECT. 5. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED A R ECONCILIATION OF THE CASH INCLUDING THE TRANSACTIONS, OCCURRING BETW EEN 23.01.2009 TO 31.03.2009. THE LD.CIT(A) AFTER VERIFYING THE RECOR DS HELD THAT THE ADDITION MADE BY THE AO IS UNWARRANTED AS THE NET C ASH BALANCE AS ON 31.03.2009 WAS ACTUALLY RS.9,60,131/-. ITA NO. 1196/MUM/2013 SHRI PRAMOD RAM NAGPAL ASSESSMENT YEAR: 2009-10 5 6. BEFORE US THE LD. DR SUBMITTED THAT, ASSESSEE WA S REQUIRED TO FURNISH THE EXPLANATION FOR DEPOSITS MADE IN THE BA NK ACCOUNT AND BEFORE THE AO, THE ASSESSEE COULD NOT GAVE ANY PROP ER EXPLANATION WITH REGARD TO SOURCE OF DEPOSITS OR RECONCILIATION FROM THE CASH BOOK. HENCE THE ADDITION MADE BY THE AO IS JUSTIFIED. REGARDING ADDITION OF RS.8,64,900/- HE RELIED UPON THE ORDER OF THE AO. 7. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT, ASSESSEE WAS ENGAGED IN THE BUSINESS OF SHARE TRADI NG FOR WHICH HE WAS WITHDRAWING MONEY FROM THE BANK ACCOUNT AND ALSO DE POSITING THE SAME FROM TIME TO TIME, IF THE CASH WERE NOT UTILIZED. F OR HIS SHARE TRADING ACTIVITY THE ASSESSEE WAS MAINTAINING REGULAR BOOKS OF ACCOUNT WHICH HAVE BEEN VERIFIED BY THE LD.CIT(A). EVEN OTHERWISE ALSO, IF AVAILABILITY OF CASH WITH THE ASSESSEE IS ANALYZED, THEN ON EACH DAY OF DEPOSIT, THE ASSESSEE HAD ENOUGH CASH-IN-HAND FOR MAKING THE DEP OSIT. HE ALSO FILED COPY OF RECONCILIATION AS WAS FILED BEFORE THE LD.C IT(A). THUS, HE SUBMITTED THAT, THE ADDITION HAS RIGHTLY BEEN DELET ED BY THE LD.CIT(A). REGARDING ADDITION OF RS.8,64,900/- BEING DIFFERENC E BETWEEN AS ON 31.03.2009 AND 23.01.2009, HE SUBMITTED THAT, AO HA S COMPLETELY MISCONSTRUED THE ENTIRE TRANSACTIONS. HE HAS NOT TA KEN INTO COGNIZANCE THE TRANSACTIONS BETWEEN 23.01.2009 TO 31.03.2009 A ND THEREFORE SUCH AN ADDITION IS WHOLLY UNWARRANTED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE FINDING GIVEN IN THE IMPUGNED ORDER. THE ASSESSEE ADMITTEDL Y IS ENGAGED IN THE BUSINESS OF SHARE TRADING. DURING THE COURSE OF SUC H BUSINESS, THE ASSESSEE HAS BEEN DEPOSITING THE MONEY IN THE BANK ACCOUNT AND ALSO MAKING REGULAR WITHDRAWALS. THE LD.CIT(A) HAS VERIF IED THE BOOKS OF ACCOUNT AND ALSO THE CASH BOOK MAINTAINED BY THE AS SESSEE. IN THE CASH ITA NO. 1196/MUM/2013 SHRI PRAMOD RAM NAGPAL ASSESSMENT YEAR: 2009-10 6 BOOK THE ASSESSEE HAS RECORDED AVAILABILITY OF CASH -IN-HAND ON DAY TO DAY BASIS AND ALSO THE DEPOSITS MADE IN THE BANK AC COUNT, FROM TIME TO TIME. THE RECONCILIATION OF CASH-IN-HAND AND DEPOSI TS MADE IN THE BANK ACCOUNT AS SUBMITTED BEFORE THE LD.CIT(A) ARE AS UN DER: FROM THE ABOVE, IT IS QUITE EVIDENT THAT THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT IS OUT OF CASH-IN-HAND AS REFLECTED IN THE CASH BOOK OF THE ASSESSEE. THUS WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A), AND ACCORDINGLY THE SAME ARE AFFIRMED. IN THE RESULT THE GROUND NO. 1 AS RAISED BY THE REVENU E STAND DISMISSED. 9. AS REGARD THE ADDITION OF RS.8,64,900/- ON ACCOU NT OF UNEXPLAINED CASH-IN-HAND, IT IS SEEN THAT, AO HAS HIMSELF TAKEN TWO DIFFERENT DATES OF ITA NO. 1196/MUM/2013 SHRI PRAMOD RAM NAGPAL ASSESSMENT YEAR: 2009-10 7 THE CASH BALANCE, FOR WHICH HE REQUIRED THE ASSESSE ES EXPLANATION. THE DIFFERENCE BETWEEN THE CASH BALANCE AS ON 31.03.200 9 AND 23.01.2009 HAS BEEN ADDED. BEFORE THE LD.CIT(A), THE ASSESSEE HAD SUBMITTED THAT, THE AO HAS COMPLETELY IGNORED THE TRANSACTIONS AFTE R 23.01.2009 AND IF THE CASH BALANCE AS PER THE BOOKS OF ACCOUNT IS REC ONCILED, THEN, THE CASH BALANCE SHOWN AS ON 31.03.2009 IS RS.9,60,131/ -. BEFORE THE LD.CIT(A), THE ASSESSEE HAS ONLY SUBMITTED A RECONC ILIATION OF THE TRANSACTIONS OCCURRED BETWEEN 23.01.2009 TO 31.03.2 009. SUCH A RECONCILIATION CANNOT BE HELD TO ADDITIONAL EVIDENC E, IF THE SAME HAS BEEN PREPARED FROM THE BOOKS OF ACCOUNT. THUS THE F INDING OF THE LD.CIT(A), THAT NET CASH BALANCE AS ON 31.03.2009 S TOOD RECONCILED IS ENTIRELY CORRECT ON FACTS AND THEREFORE, NO INTERFE RENCE IS CALLED FOR. ACCORDINGLY, GROUND NO. 2 AS RAISED BY THE REVENUE STANDS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF NOVEMBER, 2014. SD/- SD/- (SANJAY ARORA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19 .11.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.