Jitesh Laxminarayan Gajbi, Jalna V. Income-tax Officer,

ITA 1216/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5196 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDENDU DAS
• Assessee Lawyers: K SRINIVASAN
• Keywords: Unexplained cash credit; Business income; Principle of natural justice; Tax effect; Revised return
• Section: 69C; 143(3); 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1216 /P U N/201 6 / ASSESSMENT YEAR : 20 1 1 - 1 2 SHRI JITESH LAXMINARAYAN GAJBI MOTI BUILDING, SWAMI DAYANAND ROAD, NEAR RAISONI BANK, OLD MONDHA, DIST. JALNA 431203 . / APPELLANT PAN: A LUPG6225C VS. THE INCOM E TAX OFFICER, WARD 1(3), JALNA . / RESPONDENT . / ITA NO. 1343 /P U N/201 6 / ASSESSMENT YEAR : 2011 - 12 THE INCOME TAX OFFICER, WARD 1(3), JALNA . / APPELLANT VS. SHRI JITESH LAXMINARAYAN GAJB I MOTI BUILDING, SWAMI DAYANAND ROAD, NEAR RAISONI BANK, OLD MONDHA, DIST. JALNA 431203 . / RESPONDENT PAN: ALUPG6225C ASSESSEE BY : SHRI K. SRINIVASAN REVENUE BY : S HRI SUDENDU DAS / DATE OF HEARING : 1 2 . 12 .2 01 8 / DATE OF PRONOUNCEMENT: 05 . 0 2 .201 9 ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 2 / ORDER PER SUSHMA CHOWLA, J M : THE CROSS APPEAL S FILED BY ASSESSEE AND REVENUE ARE AGAINST ORDER OF CIT (A) - 1 , AURANGABAD , DATED 17 . 0 3 .201 6 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST O RDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE ON CONNECTED ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.1216/PUN/2016 HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW: 1] THE AO ERRED IN ADDING ON A PROTECTIVE BASIS AN AMOUNT OF 69,94,740/ - U/S 69A OF INCOME TAX ACT AND CIT(A) CONFIRMED ADDITION OF 16,17,000/ - OUT OF THE SAME AND SAME MAY BE HELD AS BAD IN LAW. 2] WITHOUT PREJUDICE TO ABOVE CONTENTION, AO HAS ERRED IN INVOKING PROVISION OF SEC. 69A ON PROTECTIVE BASIS EVEN AFTER ACCEPTING THAT TRANSACTIONS ARE OWNED AND ADMITTE D TO BE BELONGING TO SHRI DEEPAK FAKIRCHAND AGRAWAL AND INITIATING PROCEEDINGS AGAINST HIM. PROVISIONS OF SECTION 69A MAY BE HELD AS NOT APPLICABLE TO THE FACTS OF THE CASE. 3] THE CIT(A) ERRED IN GIVING DIRECTIONS TO COMPUTE INCOME ON SUBSTANTIVE BASIS IN HANDS OF ANOTHER PERSON AS ADVISE. AND STILL CONFIRMING PROTECTIVE ADDITION PARTLY VIOLATING PRINCIPLES OF NATURAL JUSTICE, THE ORDER OF AO AND CIT(A) ARE THEREFORE BAD IN LAW. 2) THE AO AND CIT(A) ORDERS MAY BE VACATED AND SUITABLE DIRECTIONS ISSUED TO COMPUTE INCOME IN ACCORDANCE WITH LAW. ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 3 4. THE REVENUE IN ITA NO.1343/PUN/2016 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO THE EXTENT O F RS.16,17,000/ - AS AGAINST RS.69,94,740/ - MADE ON ACCOUNT OF UNEXPLAINED CREDITS UNDER SECTION 69A OF THE IT ACT, 1961 ON SOUND FOOTINGS. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT, THE SUBSTANTIVE ADDITION MADE IN THE HANDS OF SHRI DEEPAK AGRAWAL HAS NOT REACHED TO ITS FINALITY AND MATTER WAS DECIDED PREMATURELY. III) THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 5. THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW AGAINST PROTECTIVE ADDITION OF 69,94,740/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 69A OF THE ACT WHICH WAS RESTRICTED TO 16,17,000/ - BY THE CIT(A). ON WITHOUT PREJUDICE BASIS, THE ASSESSEE IS ALSO AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW IN MAKING THE AFORESAID PROTECTIVE ADDITION IN THE HANDS OF ASSESSEE THOUGH THE TRANSACTIONS WERE OWNED AND ADMITTED TO BE BELONGING TO SHRI DEEPAK FAKIRCHAND AGRAWAL AGAINST WHOM PROCEEDINGS WERE ALSO CONFIRMED. THE ASSESSEE POINTS OUT THAT THE CIT(A) THOUGH HAS GIVEN DIRECTIONS TO COMPUTE THE INCOME ON SUBSTANTIVE BASIS IN THE HANDS OF SAID PERSON AND ON THE OTHER HAND HAS CONFIRMED PROTECTIVE ADDITION IN THE HANDS OF ASSESSEE. 6. THE REVENUE IS IN APPEAL AGAINST PARTIAL RESTRICTION O F ADDITION TO THE EXTENT OF 16,17,000/ - AS AGAINST 69,94,740/ - MADE UNDER SECTION 69A OF THE ACT. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT REVENUES APPEAL DOES NOT STAND BECAUSE OF LOW TAX EFFECT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 4 ONCE THE SUBSTANTIVE ADDITION HAS BEEN MADE IN THE HANDS OF SHRI DEEPAK FAKIRCHAND AGRAWAL, THEN THERE IS NO MERIT IN MAKING ANY ADDITION IN THE HANDS OF ASSESSEE. 8. THE LEARNED DEP ARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT COMPLETE ADDITION HAS NOT BEEN MADE IN THE HANDS OF SHRI DEEPAK FAKIRCHAND AGRAWAL AS HE HAD NOT OWNED UP ALL THE ENTRIES AND HENCE THE ADDITION HAS TO BE CONFIRMED IN THE HANDS OF ASSESSEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS DOING BUSINESS OF KACCHA ADTIYA AND WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT. THE ASSESSING OFFICER THUS, ESTIMATED THE BUSINESS PROFITS IN THE HANDS OF ASSESSEE, AGAINST WHICH THE ASSESSEE IS NOT IN APPEAL. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE WAS MAINTAINING BANK ACCOUNT WITH AXIS BANK LIMITED, JALNA, IN WHICH THERE WERE SUBSTANTIAL TRANSACTIONS. SUMMONS UNDER SECTION 131 OF THE ACT WERE ISSUED AND STATEMENT ON OATH WAS RECORDED. THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS, SOURCE OF DEPOSITS AND ALSO THE DESTINATION OF WITHDRAWALS RECORDED INTO THE AFORESAID BANK ACCOUNT. THE ASSESSEE IN RESPONSE, CATEGORICALLY STATED THAT ENTIRE TRANSACTIONS EXCEPT FEW , RELATED TO HIS COUSIN SHRI DEEPAK FAKIRCHAND AGRAWAL, WHO WAS PROPRIETOR OF M/S. VAIBHAVLAXMI SEEDS COMPANY, MAMA CHOWK, JALNA. IT WAS FURTHER EXPLAINED THAT HE HAD TAKEN B L ANK SIGNED CHEQUES FROM THE ASSESSEE AND OPERATED THE SAID BANK ACCOUNT. SIMULT ANEOUSLY, SUMMONS UNDER SECTION 131 OF THE ACT WERE ISSUED TO SHRI DEEPAK FAKIRCHAND AGRAWAL AND HIS STATEMENT WAS RECORDED ON 03.02.2014. AFTER VERIFICATION OF ENTIRE STATEMENT OF ASSESSEE, SHRI DEEPAK ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 5 FAKIRCHAND AGRAWAL CATEGORICALLY ADMITTED THAT THE E NTIRE TRANSACTIONS IN THE AFORESAID BANK ACCOUNT WITH AXIS BANK LTD. FOR EARLIER AND SUBSEQUENT ASSESSMENT YEARS PERTAINED TO HIM ONLY AND THE TRANSACTIONS RECORDED THEREIN WERE BINDING ON HIM. IN VIEW THEREOF, NOTICES UNDER SECTION 148 OF THE ACT WERE IS SUED TO SHRI DEEPAK FAKIRCHAND AGRAWAL FOR ASSESSMENT YEARS 2010 - 11 TO 2012 - 13. THE ASSESSING OFFICER VIDE PARA 8 RECORDS THAT SHRI DEEPAK FAKIRCHAND AGRAWAL HAD ADMITTED THE TRANSACTIONS IN RECOURSE TO PROVISIONS OF SECTION 147 OF THE ACT FOR THE RELEVAN T ASSESSMENT YEARS AND THE INCOME WAS ALREADY TAXED AS SUBSTANTIVE INCOME IN HIS HANDS. HOWEVER, PROTECTIVE ADDITION WAS MADE IN THE HANDS OF ASSESSEE TO THE EXTENT OF 69,94,740/ - . 10. THE CIT(A) NOTED THAT SHRI DEEPAK FAKIRCHAND AGRAWAL HAD NOT OWNED UP CASH DEPOSITS IN THE SAID BANK ACCOUNT BEFORE 19.06.2010 AMOUNTING TO 15,50,000/ - AND 67,000/ - AND HENCE, THE SAID AMOUNT WAS LIABLE TO BE TAXED IN THE HANDS OF ASSESSEE. THE CIT(A) FURTHER NOTES THAT THE ASSESSEE HAS SHRUGGED OFF THIS BURDEN AND HAS STRESSED THAT THE ENTIRE ENTRIES ARE OWNED UP BY SHRI DEEPAK FAKIRCHAND AGRAWAL AND THERE WAS NO OBLIGATION ON HIM TO EXPLAIN THE SOURCE OF SAID CASH DEPOSITS PRIOR TO 19.06.2010. THE CIT(A) REFERRED TO THE STATEMENT RECORDED OF THE ASSESSEE BY ASSESSING OFFICER IN WHICH IT WAS CLEARLY MENTIONED THAT THE ASSESSEE HAD STATED THAT THE TRANSACTIONS EXCEPT FEW, ACTUALLY RELATED TO HIS COUSIN. HE THUS, UPHELD TH E ADDITION OF CASH DEPOSITS UPTO 19.06.2010, WHEREIN CASH WAS DEPOSITED AND ON THE SAME DA Y , CHEQUES OF SIMILAR AMOUNTS WERE ISSUED TO M/S. VAIBHAV LAXMI SEEDS CO. ON ACCOUNT OF LOANS. HE ALSO NOTES THAT SUM OF 16,17,000/ - , THE AMOUNT IN QUESTION, WAS N OT OWNED BY SHRI DEEPAK FAKIRCHAND AGRAWAL AND HENCE, HE RESTRICTED THE ADDITION TO 16,17,000/ - INSTEAD OF 69,94,740/ - . ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 6 11. THE ASSESSEE IS IN APPEAL AGAINST ADDITION OF 16,17,000/ - AND THE REVENUE HAS FILED APPEAL AGAINST DELETION MADE BY THE CIT(A ). 12. DURING THE COURSE OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD FURNISHED ON RECORD THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT IN THE CASE OF SHRI DEEPAK FAKIRCHAND AGRAW AL, WHEREIN HE HAS NOTED THE FACT OF CASH ENTRIES WHICH WERE DETECTED IN THE HANDS OF ASSESSEE AND WHICH WERE CONFRONTED TO HIM AFTER RECORDING REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THE SAID PERSON IN REPLY HAD FURNISHED THE R ETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE SAID PERSON, ENTRIES IN THE BANK ACCOUNT WITH AXIS BANK LTD. WERE CONFRONTED AND HE VERY CLEARLY POINTED OUT THAT OUT OF TOTAL CASH DEPOSITS, SUM OF 35,14,240/ - REPRESENTED THE CASH SAL ES OF ASSESSEE, AGAINST WHICH HE HAD EFFECTED PURCHASES TO THE EXTENT OF 34,11,791/ - . HE CLEARLY STATED THAT DEPOSIT OF 67,000/ - WAS THE TRANSACTION BY ASSESSEE BEFORE US AND SUM OF 15,50,000/ - WAS TRANSACTION OF M/S. JITESH TRADING COMPANY. THE A SSESSING OFFICER IN THE SAID ASSESSMENT ORDER FURTHER REFERS TO THE CONFESSIONAL STATEMENT S OF ASSESSEE BEFORE US AND SHRI DEEPAK FAKIRCHAND AGRAWAL I.E. ASSESSEE BEFORE HIM AND OBSERVED THAT SAID SHRI DEEPAK FAKIRCHAND AGRAWAL HAD INDULGED IN UNACCOUNTED SALES AND PURCHASES SUBSTANTIALLY FOR NUMBER OF YEARS BY OPERATING UNDISCLOSED BANK ACCOUNT AND ADDITIONS ON ACCOUNT OF SAID TRANSACTIONS WERE MADE IN THE HANDS OF ASSESSEE I.E. ADDITION TO THE EXTENT OF 20,24,226/ - IN THE YEAR UNDER CONSIDERATION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FURTHER FILED APPELLATE ORDER IN THE CASE OF SHRI DEEPAK FAKIRCHAND AGRAWAL . THE CIT(A) HAS ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 7 ACKNOWLEDGED THAT THE ASSESSEE HIMSELF HAD OFFERED ADDIT IONAL INCOME OF 20,24,226/ - THROUGH REVISED RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT AND HENCE, THERE WAS NO RATIONALE FOR MAKING ANY FURTHER ADDITION UNDER SECTION 69C OF THE ACT. IN SUCH CIRCUMSTANCES, THE PLEA OF LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US WAS THAT THE SAID AMOUNT IS NOT TO BE ADDED IN THE HANDS OF ASSESSEE. 13. NOW, COMING TO THE BALANCE ADDITION UPHELD BY THE CIT(A) IN THE CASE OF ASSESSEE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE REFERRED TO REMAND REPORT FILED BY ASSESSING OFFICER BEFORE THE CIT(A) IN WHICH, HE HAD REPORTED THAT EVEN ENTRIES UPTO 19.06.2010 BELONGED TO SHRI DEEPAK FAKIRCHAND AGRAWAL , WHO IN HIS STATEMENT HAD ADMITTED THAT HE HAD DEPOSITED CASH, WHICH WAS O N THE SAME DAY TRANSFERRED TO HIS BUSINESS ACCOUNT. THE COPY OF REMAND REPORT IS AVAILABLE ON RECORD. IN VIEW OF ABOVE SAID, WE FIND MERIT IN THE PLEA OF ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF 16,17,000/ - MADE IN THE HANDS OF ASSESSEE. 14. AS FAR AS APPEAL OF REVENUE IS CONCERNED, THE SAME IS NOT MAINTAINABLE BECAUSE OF LOW TAX EFFECT AND EVEN ON MERITS, WHEN THE AMOUNT HAS BEEN ADDED IN THE HANDS OF SHRI DEEPAK FAKIRCHAND AGRAWAL, THERE IS NO MERIT IN MAKIN G AFORESAID ADDITION IN THE HANDS OF ASSESSEE. IT MAY BE POINTED OUT THAT SHRI DEEPAK FAKIRCHAND AGRAWAL ADMITTED THAT HE WAS CARRYING ON THE BUSINESS THROUGH SUCH UNACCOUNTED BANK ACCOUNT AND THE ESTIMATED BUSINESS INCOME WAS ADDED IN HIS HANDS AND NOT T HE TOTAL CASH DEPOSITS. ACCORDINGLY, THERE IS NO MERIT IN MAKING ANY PROTECTIVE ADDITION IN THE HANDS OF ASSESSEE. THE ITA NO. 1216 /P U N/20 1 6 ITA NO.1343/PUN/2016 8 GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED AND GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED. 15 . IN THE RESULT, APPEA L OF ASSESSEE IS ALLOWED AND APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 5 TH DAY OF FEBRUARY , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 5 TH FEBRUARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , AURANGABAD ; 4. THE PR. CIT - 1 , AURANGABAD ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE